India,” a senior banker at a
Japanese bank said.
Japanese mega banks
Mizuho, MUFG and SMBC have
focused on educating Japanese
regional banks by holding
seminars on the Indian market
and inviting Indian borrowers
for roadshows in Japan in the
last several years, which finally
bore fruit.
Apart from the three
Japanese mega banks,
domestic banks are put off
by the historical relationship
between China and Japan and
uncertainties over the US-
China trade war.
“We cannot touch any
Chinese or Korean names,” a
source at a regional bank said.
ATTRACTIVE PRICING
Nevertheless, the mega banks
and a few top-tier regional
banks are attracted to the
country’s growing population
and economy.
“Pricing is attractive
compared to the companies
with the same ratings in Japan,”
another source at a regional
bank said.
China is now rated A+ by
S&P, the same level as Japan’s
sovereign rating.
Both BoCom Financial
Leasing and CMB Financial
Leasing have Single A ratings,
which gives some comfort to
Japanese lenders looking at
taking exposure.
For example, CMB Financial
Leasing’s up to ¥20bn (up to
US$178m) three-year debut
Samurai loan offers an all-in
pricing of about 130bp.
The two leasing companies
also enjoy strong support from
their parent companies, Bank
of Communications and China
Merchants Bank.
Privately owned Huawei
Technologies does not have the
same advantages as the leasing
companies, but it does have
strong operations in Japan since
its establishment in 2005.
The loan will be borrowed
via its Dutch unit Huawei
Technologies Cooperatief UA.
The shorter tenor profile of
three years, compared with
10 or more years for Indian
companies such as Reliance
Industries, Indian Railway
Finance Corp, Power Grid
Corp of India and NTPC, is
more attractive for Japanese
investors. Khazanah raises hopes
for Malaysia ECM
Equities More blocks expected from state fund after small
CIMB tradeBY S ANURADHASovereign wealth fund Khazanah
Nasional signalled its return to
the Malaysian capital markets
last week through a small
M$364m (US$87m) block in bank
CIMB GROUP.
While the block by no
means opens up Malaysia ECM
given that it is the end of the
year, bankers are hopeful that
Khazanah, under new leadership
following this year’s change in
government, will turn to the
market more often to manage its
portfolio more proactively.
Khazanah typically raises
around M$1bn–$2bn through
the sale of shares and convertible
bonds each year, but last week’s
CIMB block marked its first
capital market transaction of
2018 as activity was muted
in Malaysia before the May
elections.
In October, Khazanah indicated
that it was considering splitting
its investments into two segments
— strategic development
programmes and commercial
investments. Analysts believe
that the fund will be looking
to invest more in strategic
development programmes to
support priority industries or
government-linked companies,
and will look to increase turnover
in its commercial portfolio to free
up cash.
As part of the cash-release
strategy, Khazanah sold a 16%
stake in IHH Healthcare to Mitsui
for M$8.42bn in late November.
The CIMB transaction was
less ambitious. The fund sold
63m shares at the bottom of a
M$5.78–$5.90 per share range.
The final price represented a
discount of 2% to the pre-deal
close.
Year to date, the FTSE Bursa
Malaysia Index is down 6%. Total
equity issuance at just US$1.5bn
as of December 1, according
to Refinitiv data, is among thelowest in South-East Asia, trailing
Indonesia, the Philippines,
Singapore and Thailand.
“The uncertainty around
Malaysia’s politics and economics
hasn’t completely disappeared
but a small deal like this can get
done even if the discount is a bit
too tight,” a banker away from
the deal said.
Foreigners accounted for 65%
of the demand in the transaction.
Books were well
oversubscribed with strong
demand from existing investors,
domestic and international long-
only accounts and multi-strategy
funds. Around 20 investors
participated with the top five
allocated more than three-
quarters of the deal.
An ECM banker said reverse
inquiries from investors after the
bank’s third-quarter earnings in
late November encouraged the
fund to launch the transaction.
“A bigger deal could have been
done if the discount was wider.
But Khazanah ideally wants to do
deals below 2% discount.”
Bankers say Khazanah could
look to reduce its positions
in Telecom Malaysia, Tenaga
Nasional and IHH via block
trades. It also holds stakes in
several overseas companies,
including an 8.8% stake in Sri
Lankan conglomerate John
Keells, worth around US$109m,
which has been linked with
an overnight block. In recent
years foreign transactions have
included stake sales in IDFC Bank
and Beijing Enterprise Water (via
an exchangeable bond).
The CIMB block represents
0.66% of the bank’s capital.
Before the sale Khazanah held a
27.46% stake. There is a 60-day
lock-up on the vendor.
CIMB Group shares closed
down 0.2% at M$5.80 last
Wednesday and are down 2.9%
year to date.
Credit Suisse and CIMB were
joint bookrunners. For daily news stories
visit http://www.ifrasia.comfor final submissions on the
RMO standard of February
22 2019 ahead of a final
policy defining the RMO
framework in March 2019 and
implementation from June
2019.
SENIOR DEMAND
Latitude New Zealand Credit
Card Master Trust Series 2018-
comprised five tranches. The
NZ$157.22m Class A and
NZ$12.83m Class B notes,
both with 2.9-year WALs and
respective credit support of
26.5% and 20.5%, priced at the
tight ends of their one-month
BKBM plus 125bp–130bp and
230bp–240bp guidance ranges.
There was some pushback
for the smaller subordinated
tranches as the NZ$11.76m
Class Cs, NZ$9.63m Class Ds
and NZ$8.56m Class Es, all
with 2.9-year WALs, priced at
one-month BKBM plus 290bp,
385bp and 500bp, at or towards
the wider end of 280bp–290bp,
375bp–390bp and 475bp–500bp
price talk.
Credit-card ABS are typically
sold out of master trusts, which
purchase eligible receivables
from the sellers on a revolving
basis.
The expected redemption
date for all the notes is
November 22 2021 while the
scheduled redemption date falls
12 months later.
Bank of America Merrill Lynch
was arranger and joint lead
manager with Deutsche Bank and
Westpac.
Latitude’s first New Zealand
ABS follows its success in the
Australian market where it sold
the country’s initial master-
trust securitisation in March
2017, a A$1bn (US$730m) credit
card ABS, and followed up with
two similar A$500m trades in
August 2017 and March 2018.