COUNTRY REPORT CHINAThe 5.5-year and 10-year notes widened
3bp and 2bp, respectively, as Asian equity
markets digested the Wall Street sell-off,
which was the biggest daily drop since
February 8.
Despite difficult marketing conditions,
the offering was still said to have attracted
three-digit tickets as investors chased an
issue with SEC-registered documentation
that earned the comfort of global investors.
Its rarity also drove appetite for the issue,
said a banker on the trade.
US-listed Baidu’s new notes have
expected ratings of A3/A (Moody’s/Fitch), in
line with the issuer.
The joint bookrunners were Bank of
America Merrill Lynch, Goldman Sachs and JP
Morgan.
› LENOVO FIVE-YEAR BOOKS US$1.1BN
LENOVO GROUP priced US$750m of five-year
US dollar senior unsecured bonds after
pulling in final orders of US$1.1bn from 56
accounts.
The Chinese computer maker priced the
4.750% five-year Reg S unrated notes at 99.921
to yield 4.768%, or Treasuries plus 215bp,
inside the initial guidance of 230bp area.
Asia took 96% of the notes, while Europe
and US offshore got the rest. In terms of
investor types, 75% were asset managers,
fund managers and public, 23% were banks
and 2% were private banks.
Proceeds will be used to fund a tender
offer, as well as to meet working capital
and general corporate needs.
BNP Paribas, Citigroup, DBS Bank, ANZ, Bank
of China, Morgan Stanley, MUFG, Santander and
Societe Generale are joint global coordinators,
joint lead managers and joint bookrunners
on the new notes issue.
Credit Agricole, China Construction Bank
(Asia), Goldman Sachs, Maybank, Natixis and
Westpac are joint lead managers and joint
bookrunners.› XUZHOU ETDZ TAKES IN US$400MXUZHOU ECONOMIC AND TECHNOLOGY DEVELOPMENT
ZONE STATE-OWNED ASSETS MANAGEMENT, with a
BB+ (negative) Fitch rating, priced US$400m
of 6.75% three-year non-put two US dollar
bonds at 99.334 to yield 7.00%.
The final pricing of the senior unsecured
notes was in line with initial guidance of
7% area.
Final orders for the issue were not
disclosed, though final statistics showed
that Asia took 100% of the notes. In termsof investor types, 83.8% were banks, 13.9%
were asset managers and fund managers,
and 2.3% were private banks.
Wholly owned subsidiary Jinshine
International is the issuer of the Reg S
notes and Xuzhou ETDZ is guarantor. The
notes also have an expected BB+ rating
from Fitch.
Xuzhou ETDZ is a local government
financial vehicle of the Xuzhou municipal
government in Jiangsu province and is
tasked with implementing the development
plans of the Xuzhou Economic and
Technology Development Zone.
Proceeds from the offering will be
used for debt refinancing and for zone
development and investment.
Haitong International and Zhongtai
International were joint global coordinators
on the issue, as well as joint lead managers
and joint bookrunners with Orient Securities
(Hong Kong).› TONGFANG DOES THREE-YEAR PRINTChinese technology company TSINGHUA
TONGFANG priced US$300m of 5.375% three-
year US dollar senior unsecured bonds at
98.307 to yield 6%, inside initial guidance of
low 6% area.Beijing Capital draws Dim Sum demand
Bonds Dual-currency Green offering enables SOE to meet target size in rocky marketBEIJING CAPITAL GROUP priced a dual-currency
US$600m-equivalent offering to take
advantage of appetite for Green bonds, as
well as for offshore renminbi notes.
A US$500m three-year Green tranche
was priced at Treasuries plus 187.5bp,
versus initial guidance of 210bp area, while a
Rmb630m (US$100m) two-year Green Dim
Sum was priced at 5.2%, from the earlier
5.5% area.
As the issuer was understood to be
targeting total proceeds of US$600m, it was
able to adjust the size of each tranche to
match demand and drive pricing tension.
Orders at final guidance came to around
US$2.3bn for the dollar tranche and
Rmb2.1bn for the Dim Sum piece, though
final book statistics had yet to be released.
The dollar portion was said to have attracted
some dedicated green investors in Europe.
The dollar tranche priced at the same
spread as the US$500m three-year issue in
January from Central Plaza Development,
which had a keepwell deed from Beijing
Capital Group with one of its subsidiaries as
a guarantor.Those bonds were a direct pricing
reference, although notes with keepwell
arrangements typically pay a higher yield
than those with direct guarantees, and
were seen at a G spread of 174bp during
bookbuilding, pointing to a double-digit new-
issue concession.
Beijing Capital Group’s dollar tranche was
bid at Treasuries plus 188bp on Tuesday,
according to Tradeweb.
The market for Dim Sum bonds has been
more stable than the one for dollar bonds
in recent weeks. Also, as some Chinese fund
managers have favoured Dim Sum bonds of
late, it was a natural choice for Beijing Capital
to include a renminbi tranche.
“Dim Sum investors still have cash and
pressure to buy, and they are looking for
yield,” said a bookrunner.
However, while that is providing support
for Dim Sum issues now, the pool of offshore
renminbi is not deep enough for all issuers to
access it.
“People in the Dim Sum market have
limited cash and, once they spend it,
it’s harder for the next issuer,” said thebookrunner. “The later they come, the higher
the yield they pay.”
Beijing Capital Polaris Investment is the
issuer of the bonds and Beijing Capital Group
is guarantor. The notes are expected to be
rated Baa3/BBB–/BBB, in line with the
guarantor.
Beijing Capital Group, a wholly owned
subsidiary of Beijing SASAC, focuses on water
and environmental protection, infrastructure,
real estate and financial services. This
includes operating several Beijing subway
lines, as well as running sewage treatment
plants and managing the water supply –
the kinds of services crucial to the smooth
running of the city. These factors raise
chances of the group receiving government
support in difficult times.
HSBC and China Citic Bank International
were joint global coordinators, as well as
joint bookrunners with ICBC International,
Agricultural Bank of China, Hong Kong branch,
Bank of China, CCB International, Bank of
Communications, Standard Chartered, ANZ,
Commonwealth Bank of Australia and Natixis.
DANIEL STANTON