International Financing Review September 8 2018 69LOANS ASIA-PACIFIC
MLAs committing US$30m or more will
receive all-in pricing of 299bp via a
participation fee of 66bp, while lead
arrangers joining with US$20m–$29m earn
an all-in of 289bp via a 40bp fee. Arrangers
coming in for US$10m–$19m will receive
all-in pricing of 280bp via a 20bp fee.
All-in pricing includes a 10bp early-bird
fee for those joining by September 24 and a
20bp put-option waiver fee.NEW HOPE SEEKS US$100m CLUBChina’s largest animal-feed maker New
Hope Liuhe is seeking a US$100m three-year
club loan.
United Overseas Bank is the sole mandated
lead arranger and bookrunner on the
financing, which has an unspecified
greenshoe option.The deal offers an interest margin of
120bp over Libor.
The borrower is NEW HOPE INTERNATIONAL
(HONG KONG), the Hong Kong unit of the
Shenzhen-listed agribusiness company.
Funds are for refinancing purposes.
In November 2015, New Hope
International (Hong Kong) raised a same-
sized three-year loan. That deal offered
all-in pricing of 180bp, via an upfront fee of
120bp, based on a margin of 140bp over
Libor.
New Hope is targeting international
expansion as growth in animal-feed demand
slows at home.H&H INCREASES LOAN TO US$450mPaediatric nutritional products maker
Health and Happiness (H&H) InternationalHoldings has increased its three-year
refinancing to US$450m-equivalent from
the US$350m-equivalent target.
Goldman Sachs was the mandated lead
arranger and bookrunner of the facility, which
has a US$400m-equivalent term loan and a
US$50m-equivalent revolving credit facility.
Lenders are ABN AMRO, Rabobank,
Commonwealth Bank of Australia, CTBC Bank,
Shanghai Pudong Development Bank Singapore,
Shanghai Pudong Development Bank, China
Everbright Bank, China Minsheng Banking Corp,
Industrial Bank, Tai Fung Bank, Tai Fung Bank
Shanghai, First Commercial Bank and KGI Bank.
The overall facility is available in US and
Australian dollars.
The interest margins range from 150bp to
225bp over Libor/BBSY tied to H&H’s ratings
from Moody’s and S&P. The initial margin is
200bp.Qantas takes off for long haul
n AUSTRALIA Airline seeks 10-year money from asset-backed borrowing
QANTAS AIRWAYS is seeking an asset-backed
corporate loan of up to A$300m (US$216m),
mimicking the structure of a financing it
completed under an innovative loan programme
last October and testing lenders’ appetite for a
longer maturity.
Australia’s largest airline is aiming to raise
a 10-year bullet facility led by BNP Paribas,
National Australia Bank and Standard Chartered- two years longer than the eight-year tenor on a
A$350m bullet loan raised last October.
“If you look at the Australian loan market this
year, the trend of pushing out tenors is quite clear,”
said a Singapore-based syndicated loans banker.
“And given how well Qantas has been performing
for the past few years, it’s a good opportunity for
them to test the market at this tenor.”
Although the 10-year tenor may not be
palatable to many banks in Asia, there are still
some – particularly Chinese banks flush with
liquidity – that would be willing to take exposure.
“Of course we are very happy to have
Qantas with us,” said another Singapore-based
syndicated loans banker at a Chinese bank. “It’s
a quality name and there’s no issue with the
long tenor at all.”
Chinese lenders committed significant
amounts to the A$350m eight-year bullet loan
Qantas completed in October. That loan was
the world’s first aviation financing of its kind,
carrying a flexible security package that allowed
Qantas to change the planes and aircraft
engines used as collateral.
Bank of China, China Construction Bank and
Industrial & Commercial Bank of China joined
with A$80m combined, nearly a quarter of the
total deal size. Seven other lenders, including
Asian, European and US banks, committed
A$200m combined.
BNP Paribas was the sole structuring bank,
while NAB was the joint MLAB of the A$350m
facility, which refinanced part of A$442m in
secured aircraft and other amortising debt
maturing in the financial year ending in June 2018.RETURN FLIGHT
The new loan is the second series under the
same programme and its structure is similar to
that of the first transaction. It carries interest
margins tied to the loan-to-value ratios, giving
the borrower more flexibility whenever collateral
is added or removed, leading to pricing and/or
collateral adjustments.
“The borrower is able to monetise its mid-life
aircraft and because of the structured nature,
pricing is extremely tight,” the loans banker said.
The margins on the latest loan are 175bp,
160bp and 145bp over BBSY for LTV ratios of
75%–80%, 65%–75%, and less than 65%,
respectively. Lenders can participate at three ticket
levels: MLAs receive a participation fee of 90bp
for commitments of A$40m or more, while lead
arrangers earn 80bp for tickets of A$30m–$39m
and arrangers receive 70bp for A$20m–$29m.
Pricing details on the October loan are not
known, but a recent unsecured loan for Qantas
provides a good comparison. In April, Qantas
closed a A$325m five-year refinancing, which
was increased from the A$250m target following
commitments from 23 lenders in general
syndication. The margins range from 105bp
to 225bp and are tied to a ratings grid. At the
current ratings of Baa2/BBB– (Moody’s/S&P),
the initial margin is 122.5bp over BBSY.LOAN ADVANTAGES
Market participants said the secured borrowing
would offer cheaper financings compared with
an unsecured bond issue.
Qantas has not tapped the bond markets
since September 2016, when it priced a A$425m
seven and 10-year issue at coupons of 4.40%
and 4.75%, respectively. That was the airline’s
only bond offering after regaining its investment-
grade status from Moody’s and S&P in February
2016 and November 2015 respectively.
In May, competitor Virgin Australia Holdings,
the country’s second-largest airline, raised
A$150m through an 8.25% five-year non-call
three medium-term note issue in what was
Australia’s first low Single B rated offering.
Both airlines recorded strong financials for
the year ending June 30 2018, with Qantas
posting a rise in its underlying pre-tax profit
to A$1.60bn, compared with A$1.40bn a year
earlier. Virgin clocked up A$109.6m for the year
ended June 30, compared with a A$3.7m loss a
year earlier.
Qantas has A$1.375bn of bonds outstanding
with staggered maturities from 2020 to 2026
and US$2.42bn in loans coming due from 2019
to 2025.
In a report published on August 23, Moody’s
noted that the airline will continue to maintain
strong liquidity, supported by cash balances
of A$1.7bn, undrawn bank facilities of A$1bn, a
significant unencumbered asset base – around
61% of its group fleet valued at about US$4bn –
and strong operating cashflow.
The Qantas Group includes the full-service
Qantas and low-cost Jetstar carriers.
Chien Mi Wong9 Loans 2250 p67-80.indd 69 07/09/2018 18:55:11