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L Tocal MarketsInvestment Facility (CGIF) is likely to emerge over the next few months via HSBC, whichhe first bond issuance guaranteed by the Asian Development Bank’s Credit Guarantee and
has been mandated by a Thai corporate aiming at tapping the Singapore dollar market.to develop Asia’s local bond markets and will only guarantee ASEAN currency local debt.The CGIF, which is structured as a US$700m trust forms part of ADB’s mission statement
CGIF’s underwriting policy and fee structure is still being thrashed out, but is likely tomimic JBIC’s structure where around 80bp is charged for a 95% credit guarantee.CGIF intends to guarantee issuance in the US$50m–$75m-equivalent ballpark, targeting
companies in the MME sector which would be unable to get a sufficiently high rating fromthe main agencies to be able to issue in the offshore G3 public markets.The move to establish the fund forms party of the ASEAN +3 drive to deepen the region’s
bond markets and foster regional financial cooperation. In 2010 ASEAN +3 established theChiang Mai Initiative Multilateralization agreement by which US$120bn was set aside toprovide a facility that would address short-term liquidity shortages in ASEAN +3 member
countries.from its vast roster of commercial banking customers in Asia, to whom the UK bankThe Thai mandate is the fruit of HSBC’s cross-selling initiative to derive DCM business
provides FX, working capital and trade finance lines and which HSBC hopes to pushfurther out on the term funding curve.
S It was a light trading day in Asian credit markets with little local input to set a definitivetone and all minds focused on the European summit later this week for cues on the short-econdary
term direction.2022s up at a 100.75 bid, versus the deal’s par reoffer last week and the Hang Lung 2017s atMeanwhile, recent new issuance has for the most part held in well, with the First Pacific
Treasuries plus 325bp bid versus a plus 335bp reoffer spread. An exception are the IOI2022s which are hanging at plus 283bp bid versus a plus 280bp reoffer.The attack on Evergrande’s paper following a “research report” from US-based Citron
research partially reversed, with the company’s due 2015s up a quarter to 93 bid, havingtanked to a low print of 89 soon after the report came out last Thursday.The rest of the China property sector had a mildly encouraging day of trading and was
up around a quarter on average. Bellwether Cogard 2018s are up a quarter at 99.625, whilethe recently issued Agile 2017s are up 0.375 at 98.75 bid.A regional syndicate head remained upbeat about the potential for the heavy Asian
pipeline to convert into a live deal, noting that in the US last week some US$2.5bn flowedinto high-grade bond funds, underscoring the bias away from risky equities and intoinvestment vehicles offering a pick-up to the scant yields available at the short end. About
US$553m went into EM bond funds too, another number that could support additionalactivity in Asia.
PIPELINE SK Innovation – Kepco – BofA Merrill, Citi, HSBC, MS, UBS US$ BofA Merrill, BNP, Citi, MS
ABM Investama Z H SHK & Co –hengTong –yundai Motor – US$ StanChart, UBS JP Morgan^ – GS, MS US$ BofA Merrill, Barclays, DB
G X^ Baoxin –Tianrui –olomt –acBank^ US$ MS, UBSUS$ DBUS$ DB, MS, UBS– US$ ING, UBSHOB C Shinhan – Iongqiaooun– US$ Citi, HSBC, SCB, JPM, RBS, Barclays, (^) try Garden –^ – US$ Barclays, DB, JPM US$ BofA Merrill, DBUS$ GS, JPM DB
Aluminum Corp of China – C Korea Telecom – GS Caltex –hina Cosco –^ US$ Citi, GS US$2bn^ SFr CS, UBS^ US$1.2bn
C Quezon Power (Philippines) – State Bank of India – Korea Midland Power –itic Bank International –^ US$500m Citi, HSBC^ US$ JPM, MS^ US$ HSBC, RBS US$ HSBC
I ndian Bank – Bharti Airtel Aluco –US$ BNP, DBS (^) – US$300m–$500m Citi, HSBC, RBS, StanChart US$1bn 10-year Reg S/144a. Barclays, DB, HSBC, StanChart, UBS
line wi© Thoms© Thomson Reuline permission of the line with the publThe contents of thmson Reuteson Reuters publishers. Actionis Briefing, eitherishing dates of IFR and will not app 2012 in whole or in part, may not be reproduced, copied, o will be taken agaear during national holidays and theinst companies who ignore this warning. IFR Daily Briefings are produced r distributed with magazine's annualout prior written end of year break. in
FFINNNNNGGG PAGE 2
ce gby a TCGIF)TThaua iThihaiararis laraaanlililiknii cntkecoteeelyoreedly torporate ad by emerge over the Asian Deviming at tappthe next few months via HSelopment Bank’s Credit Guaing the Singapore dollar mBC, whichrantee andarket.
ng polocal bois struoliboolicylionducyunductyctud md y a uuuanmarndrmreed d fee struarkets and as a US$7cture is stild will only g00m trust forl being thrasuarantee ASEAms part of ADhed out, but N currency loB’s mission sis likely tocal debt.tatement
ucture to guarhe MMMEMEME se warranarwhwhwansesecntntesectteehehetoee orrere aissuance in tr which wouldriaround 80bhe US$50m–$75m-equivalent ballpark, tarp is charged be unable tofor a 95% cre get a sufficdit guaranteeiently high r.ating fromgeting
s o ecies toand fstabfofostfoo o bblbblisstebeishbetere ae aer rteshh thh theabrehe bee to issue ilelgional financfund forms pan the offshore G3 public mial cooperatirty of the ASon. In 2010 AEAN +3 drive arkets.SEAN +3 estabto deepen thelished the region’s
cility tnitiatiththaivivthatve at e Mt wMwwoMuMultoltuuld address silateralizatihort-term liqon agreement by which US$1uidity shortages in ASEAN 20bn was set aside to+3 member
i mandFX, ast roswoostwosterorkorstndddatekier kinatnginr r otee isof e if cg ccapitcos tthe frmmercial bankal and trade uit of HSBC’sfinance lines and which HSBC hopes to ping customers cross-selling initiative in Asia, to to derive DCMwhom the UK b businessankush
daryout on nthheee tteermrm funding curve.
and alldirecta ligtil httiol til htmomimint t trn.nnntraadndraindiningds ng da focusedy in Asian credit markets with little local input to set a defini on the European summit later this week for cues on the short-tive
easurieeanwh2s up es peseshiahiahileat e, aaaplplple, ruus^1 re^10 s 3^00 325bp bid ecent new issu0.75 bid, ceversus the deversus a plusance has for the most part held in wellal’s par reoffer last week 335bp reoffer spread. An and the Hang Lung 2017s atexception are, with the Fi the IOIrst Pacific
esearc22s whThe ach pchwhchwhatattaattachicppaichacpchartckh ahck ortoniaaonially reverserere hanging atr Evergrande’sd, with the c plus 283bp b paper followompany’s due 2015s up a quid versus a ping a “researlus 280bp reoch report” frffer.arter to 93 bid, havingom US-based Citron
tankedup arThearroroud toee reddereununeso andnd too st od asta la qlofow print of 8f tohe China propuarter on ave9 soon after rage. Bellwether Cogard 20erty sector had a mildly ethe report came out last Tncouraging da18s are up a hursday.quarter at 99y of trading .625, whileand was
the rpipA ApelipeA A reprrrecininlinegne gioceceegegientenon toto cnal sytlyy issued Agile onvert into andicate head remained upbe2017s are up live deal, noting that in0.375 at 98.7at about the the US last week some US$5 bid.potential for the heavy As2.5bn flowedian
UinUntnvenvninntUS$Unto vesS$$5eso h 55553 histhigh53mtmgh-meent vem went h-grade bond fundshicles offeriinto EM bond funds too, anng a pick-up , underscorinto the scant g the bias away from riskyother number yields available at the shthat could support additio equities andort end. Abou intonalt
aPIPPPactactiIPEtivtivitELtyLINEy in Asia.
S Ke SK ABM AepK Inpco –BM InvestamaInnovation BofA Merrill,–– GS, MSUS$ BofA Merr (^) Citi, HSBC, MSill, BNP, Citi,, UBS MS
S Baoxin –B HHZHSH ZhengTong –yundai Motor HK & Co –y US$ MS, UBS^ US$ StanChart JP Morgan–US$ BofA Merr , UBSill, Barclays, DB
X G^ olomt – HTianrui –acBankongqiao US$ DB^ – US$ ING, UBUS$ DB, MS, U – US$ BarclaySBSs, DB, JPM
I Shinhan – COB GS Caltex –oun– US$ Citi, H (^) try Garden –US$ BofA Merr (^) US$ Citi, GSSBC, SCB, JPM, US$ GS, JPMill, DBRBS, Barclays, DB
C Aluminum Corp Korea Telecom – Korea Midland hina Cosco – US$2bn^ Power –of China –SFr CS, UBS US$ JPM, MSUS$1.2bn^
State Bank of ndian Bank – Quezon Power ( C Iitic Bank International –India – US$300m–$500m Citi, HSBC, RBPhilippines) –^ US$500m Citi,US$ HSBC, RBS (^) US$ HSBC HSBCS, StanChart
(^) Bharti Airtel Aluco –^ US$ BNP, DBS– US$1bn 10-year Reg S/144a. Barclays, DB, HSBC, StanChart, UBS
DCM bankers tend to say that credit markets are always the first to price in futuredevelopments. If that is true, then Indian companies will soon have access to theinternational capital markets again.
New Delhi would do something to stop the free-fall of the rupee and boost the economy atsince they peaked in the beginning of June as credit investors seemed to be predicting thatSpreads on the dollar bonds from India-based institutions have been tightening steadily
government announced plans to increase by US$5bn to US$20bn the total amount thatthe same time.They were right in expecting that, if this was the driver, as on Monday the Indian central
56.97/US$ after the announcement, close to its all-time high of 57.12 hit last Friday. Theforeign investors can put into local government bonds.Foreign exchange markets greeted the measures with scepticism, pushing the rupee to
Sensex went into negative territory after the announcement. But In
dian dollar bonds did
not give back what they had gained in recent weeks.2015 bonds of theMore than that, one trader said he saw increased buying interest in Indian names. The
of May.2016s have been trading in the 420bp area, almost 30bp inside the wide they hit at the end55bp since June 15, when they hit this year’s wide of 392bp, mid-market. ICICI Bank’s STATE BANK O IFNDAI^ , for instance, have seen their spread tighten by some
closely. The institution is said to have held informal talks with banks as iIt is no wonder, then, that the State Bank of India has been monitoring the market more
t plans to raise at
least US$1bn through a Reg S/144a issue in August – or even earlier – according to bankersinvolved in the discussions. The bank has not handed out RFPs for this deal.One banker, though, was betting there may not even be an RFP for a transaction of SBI.
first out. “It will have to be SBI” to reopen the market for them, he said. He added, though,“They are getting daily updates from the banks and will probably just announce,” he said.He noted that Indian banks were looking at the market but that SBI was likely to be the
actively buying dollar-denominated loan portfolios from European banks, which arethat levels were not yet where the bank wanted them.This comes as Nomura circulated a note on Monday stating that Indian banks have been
US$500m in loans recently and hence may need to raise dollars to fund these acquisitions.exiting that market as they deleverage. Nomura noted that SBI in particular had bought
priced the new five-year flat to that, it might be able to achieve the Libor level it selevel of 350bp over Libor. Its 2015s are currently trading at a Z-spread of 347bp–327bp. If itNomura also said SBI was eyeing a five-year bond with a spread equivalent to a swapped
eks, but
any new issue premium could breach the threshold, so SBI is likely to wait for its bonds totighten a bit more.
dollar loans become scarcer.these loan acquisitions. But corporates are also looking at dollar market more closely asOther banks are likely to follow into the footsteps of SBI as they seek dollars to fund
looking at bonds, according to bankers.Jindal Steel and Power could be looking to raise dollars to partly refinance its US$75mIndia’s I JNDAL STEEL AN PDOWER and Indian transmission utility Power Grid Corp are both
may look at funding through dollar bonds.loan maturing in November 2012 in addition to fresh borrowing. On top of that, JSPL has aplanned capex of about Rs100bn (US$1.8bn) in the fiscal year that started in April which it
for investments of Rs200bn in 2012/13 to expand its capacity.All of the issuers, though, would like to see spreads tighten a bit further. However, credit POWER GRID CORP also aims to tap the dollar bond market as a new issuer as it seeks funding
holding back from buying massively in the secondary – even if some find the curreninvestors have already predicted that Indian issuers are keen on the market, so they are
t levels
tightened spreads. But there seems to be a floor, simply because of the pending supply.attractive.Again, investors have been nibbling on the Indian bonds and that alone has already
first.This suggests that a well-priced first deal may even reprice the outstanding bonds tighter.Now, though, as bankers like to say, it is just a matter of who will stick their head out
permission of the publishers. Action will be taken against companies who ignore this warning. IFR Daily Briefings are produced iThe contents of this Briefing, either in whole or in part, may not be reproduced, copied, or distributed without prior written
n
line with the publishing dates of IFR and will not appear during national holidays and the magazine's annual end of year break.
© Thomson Reuters 2012
IFR ASIA DCM BRIEFINGJUNE 25 2012
PAGE 1
Follow us @IFRAsia
BOOKRUNNERS: 1/1/2012 TO 21/6/2012ASIA PAC G3 (EX JAP) DCM Managing bank
1 or groupJP Morgan issuesNo. of 54 US$(m)TotalShare(%)
2 HSBC Holdings 3 Citigroup (^5840) 12,528.29,292.512,735.611.711.5
5 Barclays6 Morgan Stanley4 Deutsche Bank 263643 9,208.37,698.28.57.18.6
9 BofA Merrill Lynch8 Goldman Sachs7 Standard Chartered (^1933) 5,892.77,294.56,802.45.46.36.7
Source: Thomson Reuters (SDC code: AR1)10 UBSTo t a l (^1722228) 108,588.84,490.74,205.03.94.1
ASIAN CURRENCIES DCM BOOKRUNNERS: 1/1/2012 TO 21/6/2012Managing bank
(^1) HSBC Holdings or group No. ofissues 211 11,842.0US$(m)TotalShare(%)
4 China International Capital 112 Standard Chartered 3 CITIC^19121 8,905.89,240.411,383.65.94.86.1
7 China Construction Bank5 Haitong Securities 6 Bank of China Ltd 22144 6,448.66,523.23.43.34.6
9 Hana Financial Group 8 UBS (^2814) 5,358.66,059.35,490.12.83.1
10 DBS Group HoldingsSource: Thomson Reuters (SDC code: AS1)To t a l 1,273 194,562.2 (^37) 4,295.12.22.8
BOOKRUNNERS: 1/1/2012 TO 21/6/2012HONG KONG DCM Managing bank
1 or groupHSBC Holdings No. ofissuesUS$(m)TotalShare(%)
2 Standard Chartered 3 RBS 56739 32,644.0 46.020,802.84,539.029.3
5 National Australia Bank6 UBS4 BNP Paribas 144 4,260.01,543.66.02.26.4
8 Bank of Communications 7 Barclays 223 1,400.01,190.0800.02.01.7
10 BofA Merrill Lynch9 Morgan StanleyTo t a l 17212 683.0772.01.01.11.1
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