China Bond House
ICBC leveraged its unparalleled combination of domestic depth and overseas expansion to help its clients capture a wide variety of fixed-income opportunities.
The group, together with its subsidiaries, has honed its ability to distribute on various fixed-income platforms worldwide. ICBC showed its growing international clout in the year under review, winning roles on multiple international bond issues and introducing new products, while taking a wider range of deals to its home market.
ICBC demonstrated its grasp of the China market in April with an offering of Rmb5bn (US$801m) in 4.2% three-year SME finance bonds for Standard Chartered (China). It was the first small and medium enterprise bond from an international bank. ICBC’s timing allowed the deal to price at one of the lowest yields in the sector, despite coming from a debut and foreign-owned issuer.
Capitalising on its experience in securitisation, ICBC brought a Rmb3.59bn collateralised loan obligation to the market in late March. Unlike most asset-backed offerings in China, the deal was structured to make the senior and the equity tranches more marketable to a wider base of investors, and set a model for others.
ICBC’s position in China gave it an edge over competitors even during a mid-year liquidity squeeze. When the overnight lending rate in the interbank market hit a record high of 30% on June 20, ICBC managed to help SME Meidu Holding to issue a corporate bond of Rmb350m at a 6.3% coupon.
The group also gained a significant share of the offshore bond market as Chinese issuers stepped up their overseas fundraising drives – one of the main themes of the year in Asia’s international debt markets.
Its connections with Chinese investors meant ICBC was able to commit anchor orders to help drive momentum to deals. All told, ICBC stood out in underwriting 14 investment-grade and 17 high-yield deals, more than any other Chinese bank.
Volume aside, ICBC also impressed with its focus on innovation. Hong Kong subsidiary ICBC Asia printed Asia’s first public issue of Basel III-compliant bank capital in US dollars in October, paving the way for other banks to follow.
The bank also led 13 issues in the offshore renminbi bond market, excluding self-led deals. One of the most notable deals came near the end of the year when ICBC became the first Chinese bank to issue offshore renminbi debt in London, and the first to issue it at group level rather than through an overseas unit. The bank’s Rmb2bn dual-tranche issue drew strong responses from UK and European investors.
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