According to the notice seen by IFR, Citi
said the issuer had defaulted by failing to
provide the trustee with officers’ certificates
stating the fixed charge coverage ratio and
the company’s compliance with indentures
in due time.
The company should have delivered the
certificates to the trustee on or before May
30 2018, or 150 days after the end of the
company’s fiscal year, but failed to do so,
said Citi.
“Holders have the right to notify the
company of the default and the company
will have 30 days to cure such default,” said
the trustee.
The notice, dated August 27, attaches a
letter by Huachen Energy, which the
company also filed to the Singapore
Exchange on August 27.
In the letter, Huachen said it had engaged
advisers for a review of the potential impact
on the company from the financial
difficulties of its parent company Wintime
Energy.
The company also said in the letter it
believes that the indicative strategic
restructuring co-operation agreement
between Wintime Holding and Beijing
Energy will probably help address any
adverse impact its parent’s difficulties may
have on the company and its obligations
under the notes.
Moody’s on July 7 cut Huachen’s B1 rating
to Caa1 and its US dollar bonds to Caa2 from
B2 as a result of its parent’s default.
Huachen is a wholly owned subsidiary of
Shanghai-listed coal company Wintime
Energy, which in turn is 32% owned by
Wintime Holding. Beijing Energy is wholly
owned by the Beijing government.MANDATES PILE UPCHINA JIANYIN INVESTMENT (A2/A/A+), an
investment arm of sovereign wealth fund
China Investment Corp, has hired banks for
a proposed offering of US dollar senior
bonds.
Bank of China, HSBC and Cinda International
are joint global coordinators as well as joint
bookrunners and joint lead managers with
ICBC International, Bank of Communications,
China Everbright Bank Hong Kong branch, DBS
Bank, OCBC Bank, China Citic Bank International
and CICC.
Jianyin will meet investors in Singapore
and Hong Kong, starting on Monday.
The proposed Reg S notes will be issued
by Xingsheng (BVI) and guaranteed by JIC
Leasing Company, a subsidiary of Jianyin.
The bonds will also have the benefit of a
keepwell deed to be provided by Jianyin and
are expected to be rated A+ by Fitch.
Jianyin is the sole and wholly owned
industrial business investment platform ofInternational Financing Review September 8 2018 59EMERGING MARKETS ASIA-PACIFIC
Sinopec, CGNPC fill
up offshore
nCHINA Investors see high-quality Chinese SOE credits as safe assets in market turmoil
Two of China’s top state-owned enterprises saw
healthy demand for new offshore bond issues
last week, defying emerging markets turmoil
and the US-China trade dispute.
Both locked in tight pricing as investors
sought a haven in choppy market conditions,
although order books failed to reach the dizzy
oversubscription levels of past years.
CHINA GENERAL NUCLEAR POWER CORPORATION,
rated A3/A–/A, on Tuesday priced US$1.18bn-
equivalent of dual-currency three-tranche Reg
S bonds, kicking off supply from central SOEs
following the summer holidays and first-half
corporate earning announcements.
The next day, CHINA PETROCHEMICAL
CORPORATION (Sinopec Group), rated A1/A+
(Moody’s/S&P), printed US$2.4bn of 144A/
Reg S bonds in four tranches with minimal new
issue concessions.
In the meantime, CHINA SOUTHERN POWER
GRID and CHINA STATE SHIPBUILDING CORPORATION
have chosen banks for proposed offshore bond
sales and are likely to tap the market this
month.
“High-quality Chinese SOEs are always in
demand and it is just a problem of pricing,”
said a banker close to CGNPC and Sinopec
deals.
He admitted the rout in emerging markets,
global trade tensions and tight pricing had
dampened investor sentiment, but said the two
deals still attracted a good response.
“In such a market, you can’t expect to
exceed US$10bn of orders like in the good old
days, but demand was still healthy and big
institutional investors including central banks
and sovereign wealth funds participated,” he
said, referring to Sinopec’s issue.
Final orders for Sinopec’s four-part issue
were over US$3.725bn, with US investors
actively participating in the deal.
Asia’s largest refiner priced US$750m of
3.75% five-year, US$500m of 4.125% seven-
year and US$750m of 4.25% 10-year notes
at 110bp, 135bp and 145bp over Treasuries,
respectively, inside initial guidance of 125bp
area, 145bp area and 160bp area. A US$400m
4.60% 30-year tranche was priced 5bp inside
4.65% area guidance.
The issue size fell slightly short of an
informal US$2.5bn–$3bn target, partly
because of the tight pricing.
“Sinopec is more concerned about the
pricing than the issue size as it has a strong
balance sheet and plenty of funding channels,”the banker said. “The deal is indeed more
of a yearly exercise and it wants to achieve a
reasonable curve for its bonds and is reluctant
to give too much premium.”
Indeed, Sinopec’s IPTs were already
relatively tight, especially the five and seven-
year tranches, which repriced Sinopec’s
secondary curve 1bp–3bp tighter on the day of
bookbuilding.
At final pricing, the seven and 10-year
tranches only offered about 3bp of new issue
concession while the five-year tranche was
priced without any premium, according to the
banker. The premium was hard to estimate
for the 30-year tranche, given the illiquidity of
Sinopec’s paper at the long end, he said.SAFE BETS
A Hong Kong-based fund manager from an
insurance company said low-beta names such
as Sinopec were relatively safe bets in a volatile
market.
“Within Asia, Chinese IG credits were
relatively stable compared with those of
Indonesia and India. For central SOE names
like Sinopec, there is not even the slightest
doubt about their credit fundamentals,” he
said.
CGNPC also printed its dollar bonds with
little premium, although it had to make a
concession for its new euro bonds.
The state-owned nuclear power company
priced a US$500m 3.875% five-year at
Treasuries plus 120bp, 25bp tighter than initial
145bp area guidance. It also added a US$100m
30-year tranche at par to yield 4.8%, or
Treasuries plus 173.4bp, on the back of reverse
enquiries.
A €500m (US$581m) 2.00% seven-year
euro Green tranche was priced at 99.696 to
yield 2.04%, or mid-swaps plus 150bp, slightly
tighter than initial 155bp area guidance.
“Demand for the five-year dollar tranche
was solid and no new issue concession has
been given despite a volatile market,” the
banker said. Demand for the euro tranche
was lacklustre, despite offering a new issue
concession of around 15bp, as the weak euro
affected investor appetite.
Final orders for the five-year dollar tranche
were over US$1.75bn while the euro tranche
drew final orders of over €750m. Order details
for the 30-year dollar tranche were not made
available.
Carol Chan8 Emerging 2250 p57-66.indd 59 07/09/2018 18:54:48