Thailand are still issued
through certificates, which
makes bond settlement more
challenging.
“This creates an inefficient
settlement procedure and
results in higher counterparty
risks,” said Ariya Tiranaprakij,
ThaiBMA executive vice
president.
“ThaiBMA is now exploring
the use of blockchain to
allow for more secure and
efficient record keeping
transfers of bonds. We are now
finalising the requirement for
developing proof of concept
phase one which focuses
on the record keeping of
corporate bonds sold in the
primary market.”
Bankers are optimistic that
the use of the technology in
the corporate bond market
will increase transparency
and prevent fraud, as well as
promoting liquidity in the
secondary market and more
timely and efficient trading.
“We believe that the
adoption on a wider basis in
the corporate bond market
will take place only one to two
years after the BOT has used
it for the savings bonds,” said
Kasikornbank’s capital markets
business division team in an
emailed reply to queries.
There are still concerns
over the use of blockchain
technology to sell savings
bonds, however. One question
is who bears the costs incurred
by various parties, including
banks, participating in the
development phase.
There also questions about
how the use of the technology
will affect the allocation of
human resources. Thai bankers
are concerned that the impact
will be felt strongly in the
middle and back-office sections
where data verification,
clearing and settlement may be
streamlined.
But for banks, the reduction
in personnel is likely to cut
costs and could push the
lenders to undertake more data
analytics and generate new
products. Aflac pushes
Global yen duration
Bonds Insurer extends maturities, but some investors
baulk at long tenorsBY DANIEL STANTONUS insurer AFLAC tested appetite
for duration with a ¥53.4bn
(US$475m) three-tranche
Global yen bond offering at
its longest tenors so far in the
currency.
It priced a ¥29.3bn 12-year
tranche at yen offer-side swaps
plus 66bp, a ¥15.2bn 15-year at
swaps plus 86bp, and a ¥8.9bn
20-year at a yield of 1.75%.
Earlier guidance for the
respective tranches was
64bp–68bp, revised from
60bp–70bp guidance on
Monday; 84bp–88bp, from
80bp–90bp; and 1.75%–1.80%,
from 1.75%–1.85%.
This is the first time an
issuer of Global yen bonds has
conducted an offering with
tenors no shorter than 12 years.
Corning in the global yen
market and EdF in the Samurai
market also printed 20-year
bonds last year, but their
offerings included tranches
with maturities of 10 years of
less.
The long tenors created a
challenge, as some investors
were restricted from buying by
their internal rules.
Sources close to the deal said
that there was limited demand
from life insurers, who tend
not to want to buy bonds from
their peers.
“If you want to go longer,
lifers are the clear target, but
we cannot count on them for a
lifer name,” said one source.
There are also some central
accounts which cannot invest
in bond tenors longer than 10
years.
Regional investors like
shinkin banks bought just
under half of the offering,
while central investors like
asset managers and trust banks
were also active participants.
Around 70 accounts took part
in total.Last year, Aflac sold
subordinated 30-year non-call
10 hybrid securities in yen,
but its longest maturity for a
senior bond tranche so far in
the currency is 10 years. It sold
¥60bn of 10-year Global yen
bonds in January last year at
69bp over yen offer-side swaps,
with a coupon of 0.932%.
The respective coupons
for the 12, 15 and 20-year
bonds were 1.159%, 1.488%
and 1.750%, which looked
attractive considering that
1% has been considered the
target yield for investors at the
10-year tenor. Investors have
tended to weigh up relative
value against issuers’ dollar
and euro bonds at shorter
tenors, but at 10 years or
higher the absolute yield is
more important.
Aflac is headquartered in
the US, but 70% of its revenue
came from Japan in the six-
month period ended June 30,
and 85% of its assets were
attributable to the Japanese
business as of the end of June,
according to a prospectus filed
with the SEC.
That large Japanese
customer base, plus its repeat
issues in yen, mean that Aflac
has strong recognition among
Japanese investors, allowing
it to push out to longer
maturities this time.
“They are an insurer, so
naturally they want longer-
dated money,” said another
source.
“I wouldn’t say it’s a natural
movement for investors to go
out longer these days, but it’s
true that some investors’ target
maturity is expanding.”
The senior bonds are
expected to be rated A3/A–/A
(Moody’s/S&P/R&I).
Mizuho, Morgan Stanley
and SMBC Nikko were joint
bookrunners for the SEC-
registered offering. For daily news stories
visit http://www.ifrasia.com“Most of the Asia funds
prefer to trade Haier through
the Shanghai-Hong Kong Stock
Connect scheme as they have
concern over the liquidity of
the D-shares,” said the second
person.
Haier is among the 800-plus
Shanghai-listed stocks which
can be traded through Stock
Connect.
The D-share sale is expected
to gain support from Haier’s
business partners, said people
familiar with the situation.
Taiwan’s Rechi Precision,
which counts Haier as its
second-largest customer, said
last week it would invest up to
€30m (US$35m) in the D-share
sale.
Books will open on October
15 and close on October 18. The
D-shares will start trading on
October 24.
Haier intends to use proceeds
to part-fund the planned
acquisition of Italian home
appliance maker Candy, to
expand its production capacity
for smart appliances, to develop
its marketing channels and
become more of a household
name especially in Europe,
as well as for research and
development.
Deutsche Bank is the sole
global co-ordinator for the
Frankfurt listing. CICC, JP
Morgan and UBS are the joint
bookrunners.
D-shares, similar to Hong
Kong-listed H-shares, are new
instruments being touted by
the China Europe International
Exchange (CEINEX), a joint-
venture trading platform that
the Shanghai Stock Exchange,
China Financial Futures
Exchange and Deutsche Boerse
created in November 2015.
CEINEX markets itself as
a gateway for Chinese firms
looking to gain access to
European investors, offering
renminbi-denominated
products, including stocks,
bonds and exchange-traded
funds on the Frankfurt
Stock Exchange’s existing
infrastructure and under
German regulations.