IFR Magazine – January 20, 2018

An offering of Reg S unrated senior
guaranteed notes may follow.
The notes will come with an
unconditional and irrevocable guarantee
from Tsinghua Unigroup and will be issued
in the name of offshore subsidiary Tsinghua
Unic.

XIAMEN XIANGYU TARGETS DOLLARS

State-owned XIAMEN XIANGYU GROUP,with a BBB
(stable) rating from Fitch, hired banks to
arrange investor meetings in Hong Kong,
Singapore and London from January 18 for a
proposed offering of senior unsecured US
dollar notes.
Standard Chartered, ICBC International
and Bank of China are joint global
coordinators, as well as joint lead
managers and joint bookrunners with
30$"û)NTERNATIONALûANDû3INO0ACû3ECURITIESû
(Asia).
The notes, with an unconditional and
IRREVOCABLEûGUARANTEEûFROMû8IAMENû
8IANGYUûWILLûBEûISSUEDûINûTHEûNAMEûOFû
SUBSIDIARYû(ONGKONGû8IANGYUû)NVESTMENTû
They have an expected rating of BBB from
Fitch.
8IAMENû8IANGYUûBASEDûINûTHEû8IANGYUû
Bonded Zone in China’s south-eastern
Fujian province, is a logistics and supply
chain services provider.

FITCH DOWNGRADES IMHCD ON REVISION

Fitch Ratings has downgraded INNER MONGOLIA
HIGH-GRADE HIGHWAY CONSTRUCTION AND
DEVELOPMENT to BBB– from BBB after the
GOVERNMENTûTHEREûSAIDûITSûlSCALûANDû
economic numbers for 2016 had been
overstated.
The agency said the action followed a
downgrade of its internal assessment of the
creditworthiness of China’s Inner Mongolia
Autonomous Region, while the linkage
between the company and the government
remained unchanged.

)TûALSOûCUTûTHEûRATINGûONû)-(#$Sû

US$400m 4.375% senior unsecured bonds

due 2020 to BBB– from BBB.

Inner Mongolia has lowered its industrial

OUTPUTûlGUREûFORûûBYûûTHEûOFlCIALû

8INHUAûNEWSûAGENCYûREPORTEDûONû*ANUARYûû

)TûALSOûSAIDûlSCALûREVENUEûFORûTHATûYEARûWASû

26% less than initially stated. It did not give

details.

The government also cut by 17% its 2017

general public budget revenue guidance,

implying 15% year-on-year growth, based on

the restated 2016 numbers.

Fitch said the downgrade of its internal

assessment of the region’s creditworthiness

took into account the limited data

robustness and weak internal governance in

the region.

!LLûRATINGSûONû)-(#$ûHADûBEENûPLACEDûONû

2ATINGû7ATCHû.EGATIVEû&ITCHûSAIDûREmECTINGû

expectations of more data revisions from

THEûGOVERNMENTûINCLUDINGûPASTûlSCALûANDû

ECONOMICûlGURES

)-(#$Sû53MûOFûûSENIORûNOTESû

widened by 19bp on Friday morning to

261bp over Treasuries, according to

Tradeweb.

HONG KONG

FWD HIRES TRIO FOR DOLLAR PERPS

FWD, rated Baa3/BBB (Moody’s/Fitch), has

mandated HSBC, Citigroup and Standard

Chartered as lead managers and bookrunners

for an offering of US dollar perpetual

securities.

4HEûINSURANCEûCOMPANYûWILLûMEETûlXED

income investors in Hong Kong, Singapore

and London, starting Monday, for the

proposed Reg S subordinated perps, which

have initial ratings of Ba2/BB+ (Moody’s/

Fitch).

HSBC is sole structuring adviser.

UNION MEDICAL HEALTHCARE HIRES

UNION MEDICAL HEALTHCARE has hired banks for

a proposed offering of US dollar bonds

under Reg S format.

The bonds are expected to be rated B1 by

Moody’s, in line with the issuer. Investor

meetings will be held in Hong Kong and

Singapore from January 22.

CMB International Capital is sole global

coordinator, and joint bookrunner with UBS

and Haitong International.

UMH is an aesthetic medical service

provider headquartered in Hong Kong, with

clinics in Hong Kong, mainland China and

Macau.

The company intends to use the proceeds

for working capital and general corporate

purposes.

INDIA

TATA STEEL ATTRACTS GLOBAL ATTENTION

TATA STEEL received a resounding response for

)NDIASûlRSTûHIGH

YIELDûBONDûDEALûOFûTHEûYEARû

as investors snapped up a US$1.3bn dual-

tranche offering despite a light covenant

structure and tight pricing.

ABJA Investment, a wholly owned

subsidiary of Tata Steel (Ba3/BB–/BB), issued

a US$1bn 10-year at 5.45%, well inside initial

guidance of 5.875% area, and a US$300m 5.5-

year tranche at 4.45%, from the initial

4.875% area.

The multinational steelmaker was able to

price inside fair value of 4.6%–4.7% for the

5.5-year, even though it did not come with a

guarantee unlike its last US dollar

transaction in 2014, when it priced 4.85%

2020s and 5.95% 2024s.

Investors were willing to accept a lighter

covenant structure than in previous issues.

A cross-default provision on the existing

2024s covers the latest notes, but once the

2024s are redeemed there will no longer be

any cross-default protection.

Tata Steel does not plan to issue bonds

with cross-default provisions in the future,

GIVINGûITûMOREûmEXIBILITYûONûITSûCAPITALû

structure.

The company has been issuing loans via

overseas subsidiaries without guarantees

and wants to stick to this process for

upcoming borrowings.

Once the 2024s mature, the investors of

the new 2028 bonds will only have a non-

binding letter of comfort from the parent to

fall back on.

“This is a massive plus for the Indian high-

yield sector as as whole,” said a banker on

the deal. “Investors were able to look

beyond the lighter covenant structure.”

The hefty US$4.7bn order book prompted

investors to also buy the steelmaker’s

outstanding 5.95% July 2024s. Those bonds

tightened 10bp during the marketing

process, trading near their tightest level

since issue nearly four years ago.

Orders had peaked at US$7bn before

guidance was tightened. The book included

tickets of over US$150m from global

emerging-market fund managers.

$EMANDûWASûSKEWEDûTOûTHEû

YEARû-OREû

than half of those notes, or 56%, went to

EMEA investors, a rare feat for Asian Reg S

deals, highlighting the global demand for

Tata Steel.

“It was a combination of investors

wanting yield, expectations of better

liquidity and pricing versus the existing

curve,” said another banker on the deal.

The latest offering was wrapped around

par in the aftermarket.

ALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2018 TO DATE

Managing No of Total Share
bank or group issues US$(m) (%)
1 Citigroup 20 6,080.83 13.0
2 HSBC 20 4,392.73 9.4
3 Standard Chartered 12 3,231.87 6.9
4 Deutsche Bank 14 3,173.85 6.8
5 BNP Paribas 11 2,039.87 4.3
6 Goldman Sachs 9 2,013.17 4.3
7 Sumitomo Mitsui Finl 3 1,810.52 3.9
8 BAML 12 1,802.98 3.8
9 Morgan Stanley 10 1,699.77 3.6
10 JP Morgan 9 1,429.34 3.0
Total 60 46,955.48
Excluding equity-related debt.
Source: Thomson Reuters SDC code: L1