allocation for BoCom Sydney, with Asia
TAKINGûûANDû%-%!û
"ANKSûTOOKû ûASSETûMANAGERSûûANDû
OTHERSû
BoCom Sydney, which has a A$170m FRN
issue maturing on December 10 2018, sold
!MûOFû
YEARû&2.SûINû*UNEû û
WHICHûWEREûALSOûPRICEDûBPûWIDEûOFûTHREE
month BBSW.
The most recent Australian issue from a
Chinese bank was on April 17, when
Industrial and Commercial Bank of China,
Sydney branch (A1/A/A) sold A$300m of
three-year FRNs at 102bp over three-month
BBSW. ICBC tapped that note issue for
!MûTWOûDAYSûLATER
ZHONGRONG BONDS STRUGGLEZHONGRONG INTERNATIONAL TRUST’s dollar bonds
were seen at a sky-high yield after the
chairman of its parent company was placed
under investigation.
The Central Commission for Discipline
Inspection, China’s top graft watchdog, said
ONû4HURSDAYûITûHADûPLACEDû:HANGûIE û
chairman of central government-backed
China Hi-Tech Group Corp, under
investigation for “serious violations of laws
ANDûDISCIPLINESv û#HINESEûlNANCIALûNEWSû
service Caixin reported.
Unlisted China Hi-Tech is the parent
COMPANYûOFûINGWEIû4EXTILEû-ACHINERY û
WHICHûOWNSûAûûSTAKEûINû:HONGRONGû
International Trust.
Zhongrong International Trust’s wholly
owned subsidiary Zhongrong International
(OLDINGSûHASû53MûBONDSûDUEû*UNEûû
that were quoted on Friday at 89.3, implying
AûYIELDûOFû ûACCORDINGûTOû4RADEWEBû30û
rates the bonds BB–.
CHINESE CREDITS PLAN DEALSCHANGDE URBAN CONSTRUCTION AND INVESTMENT
GROUP, rated BBB– by Fitch, has mandated
Guotai Junan International and Bank of China as
JOINTûGLOBALûCOORDINATORSûFORûAû53ûDOLLARû
bond issue.
4HEû*'#SûAREûALSOûJOINTûBOOKRUNNERSûANDû
JOINTûLEADûMANAGERSûWITHûMizuho Securities.
Fixed income investor meetings in Hong
+ONGûANDû3INGAPOREûSTARTEDûONû/CTOBERûû
for the Reg S senior unsecured bonds. The
bonds, if issued, are expected to be rated
BBB– by Fitch.
CHINA CITIC BANK INTERNATIONAL, rated A3/BBB
(Moody’s/Fitch), has hired banks for a
proposed offering of US dollar-denominated
Basel III-compliant undated non-cumulative
subordinated Additional Tier 1 capital
securities.
4HEûPERPETUALûNON
CALLûlVEû!4S ûTOûBEû
ISSUEDûUNDERûTHEû(ONGû+ONG
INCORPORATEDû
and licensed lender’s US$3bn medium-term
note programme, have an expected Ba2
rating from Moody’s.
China Citic Bank International, Citigroup,
HSBC and ICBC InternationalûAREûJOINTûGLOBALû
coordinators on the Reg S issue. They are
ALSOûJOINTûLEADûMANAGERSûANDûJOINTû
bookrunners with ABC International, CLSA,
CMBC Capital, Mizuho Securities, Silk Road
International and Standard Chartered Bank.The Chinese lender, the offshore arm of
China Citic Bank, will meet investors in
3INGAPORE û(ONGû+ONGûANDû,ONDON ûSTARTINGû
Monday.
STATE POWER INVESTMENT CORP, rated A2/A–/A,
has hired banks for a proposed offering of
US dollar senior unsecured bonds.
JP Morgan, Bank of America Merrill Lynch, BOC
International and ICBCûAREûJOINTûGLOBALûEMERGING MARKETS ASIA-PACIFICGraft case rocks Lippo
Karawaci
INDONESIA Allegations add to developer’s cashflow, currency worriesLIPPO KARAWACI’s offshore bonds sold off
after Indonesia’s anti-corruption agency said
that company officials had been detained in
connection with an alleged bribery case.
The Komisi Pemberantasan Korupsi said on
Monday that a Lippo Group official had been
charged in connection with the alleged payment
of bribes to government officials to procure
permits for the company’s US$21bn Meikarta
township project in Bekasi, a suburb of Jakarta.
The KPK on Thursday said it had raided 10
locations, including the home of the deputy
chairman of the Lippo Group, James Riady, as
part of the investigation, Reuters reported.
The KPK said Lippo employees detained last
week said they had been acting on instructions
from Lippo director Billy Sindoro to bribe Neneng
Hasanah Yasin, the regent for West Java’s Bekasi
area.
Sindoro has also been arrested, as well as
four other public servants. Lawyers for Sindoro
and Yasin have not responded to requests for
comment.
The Meikarta project is a development by
Mahkota Sentosa Utama, a 49.99%-owned
subsidiary of Lippo Cikarang, which is 54%-
owned by Lippo Karawaci.
Lippo Karawaci said in a statement that it
was very surprised by and deeply regretted the
alleged bribery incident. It said MSU would
immediately conduct an independent internal
investigation to determine the facts, and would
support the KPK’s work.
“PT MSU is a corporation that upholds the
principles of good corporate governance and
anti-corruption, so that it has and continues to
commit to reject corrupt practices, including
bribery in business,” wrote Lippo Karawaci in a
Bahasa-language announcement.CREDIT NEGATIVE
Moody’s said the alleged bribery incident
was credit negative, although the company’s
B3 rating with a negative outlook was so far
unaffected.CreditSights said the matter raised red flags
about the company’s corporate governance, and
came soon after Lippo Karawaci failed to file its
financial results on time.
“Such issues further add to the woes of the
company, which is already reeling from cashflow
issues, liquidity pressure and currency exposure,”
wrote CreditSights.
Moody’s said the allegations would have a
limited financial impact on Lippo Karawaci at
the holding company level, but highlighted the
company’s corporate governance challenges
and could damage its reputation, as well as the
confidence of investors and consumers.
Lippo Karawaci’s dollar bonds due 2026 fell
3.4 points last week to a cash price of 66.9 on
Thursday, implying a yield of 13.7%, according to
Tradeweb.
Its 2022 bonds callable next month fell 4.8
points to 75.5, implying a yield of 16.6%.
Lippo Karawaci has a relatively long-dated
maturity profile compared with other Indonesian
developers, said Moody’s, but has Rp590bn
(US$39m) of loans with local banks coming
due in 2018 and 2019, as well as a US$50m
syndicated loan with UBS and Deutsche Bank
that was originally due in September but that
has been extended until April 2019.
“Assuming Lippo Karawaci has to refinance
Rp1.3trn of debt coming due in 2018 and 2019
at a higher cost, reflective of today’s yields,
we expect the company’s interest burden to
increase around 6% or Rp60bn, which will add
pressure on Lippo Karawaci’s already fragile
liquidity position, given its cash burn rate of
around Rp1.1trn and Rp1.3trn in 2018 and 2019,
respectively,” wrote Jacintha Poh, senior analyst
in Moody’s corporate finance group.
Moody’s last month downgraded Lippo
Karawaci’s rating, and that on its bonds issued
through Theta Capital, to B3 from B2, its second
downgrade this year.
S&P in April cut its respective ratings to B–
from B, while Fitch in May cut Lippo to B from B+.
Daniel Stanton