Reg S: An elderly tycoon considers retirement

China Evergrande Group’s voracious debt appetite and jitters in the Chinese market left investors nursing huge losses on almost US$10bn of new high-yield bonds last week. Evergrande added US$3.8bn of new debt, alongside US$2.8bn through an exchange offer, last Wednesday, a day before Kaisa Group Holdings completed its own US$2.7bn exchange and sold a more modest US$792m of net new debt. The huge new supply caught investors off guard, and Evergrande’s bonds plunged in early trading. At one point, the new 2025s were down six points at a bid of 94...

The potential buyout of Singapore-listed Global Logistic Properties has the Asian loan markets buzzing in anticipation of a record leveraged financing. Around 20 lenders are working with three consortia in the hope of securing roles on an LBO loan, which could total up to US$10bn. Bankers were scrambling to put together proposals ahead of a deadline last week, scotching reports that most of the bidders had dropped out. The deadline for second-round bids is the end of the month. Several banks are supporting more than one bidder, in a sign of the...

Fears of an impending Australian housing crash resurfaced last week after Moody’s downgraded the country’s Big Four lenders, though the market response was notably muted. ANZ, Commonwealth Bank of Australia, National Australia Bank and Westpac each had their rating cut one notch to Aa3, with stable outlooks, from Aa2, a decision the agency blamed on “elevated risks within the household sector (that) heighten the sensitivity of Australian banks’ credit profiles to an adverse shock”. Downgrades threaten a spike in funding costs, especially...

China’s equity markets received their biggest global endorsement so far as US index provider MSCI finally opted to include mainland A-shares in its benchmark emerging markets index. The inclusion of A-shares in the MSCI Emerging Markets Index, tracked by US$1.6trn of assets globally, is expected to trigger significant capital flows from foreign investors into China’s equity markets, which hitherto have been dominated by domestic investors. “It’s an historic decision given China is of course such a large economic superpower and the lack of...

BPCE last week became the first foreign bank to sell social bonds in the Samurai market. The French lender priced ¥58.1bn (US$522m) of Samurai bonds in four tranches of five, seven, 10 and 15 years through leads Daiwa, Mitsubishi UFJ Morgan Stanley, Mizuho, Natixis and SMBC Nikko. The proceeds are intended to refinance loans granted to clients of its cooperative banks in the education, healthcare and social sectors. Natixis and Mizuho advised on the social component. The ¥24.5bn 0.214% five-year tranche priced at 7bp over yen offer-side swaps...

Investors won healthy price concessions on two high-profile Malaysian financings last week, in a sign of measured enthusiasm for the country’s rebounding equity markets. Mobile phone operator Maxis on Monday completed the country’s biggest follow-on offering of the year, while petrochemical firm Lotte Chemical Titan covered the books on its IPO shortly after launch. Both companies, however, attracted demand at the bottom of the respective prices ranges. “Let’s put it this way, the bounce is lacking force,” an ECM banker said. The Malaysian...

The up to US$1bn Hong Kong IPO of Shandong Gold Mining has emerged as the latest example of Chinese banks turning to low fees to squeeze out their international rivals. Shandong Gold, which is already listed in Shanghai, drew offers to underwrite the IPO for as little as 0.2% at a beauty contest in mid-June. At least one foreign bank declined an invitation to match the final terms after the company settled on an underwriting fee of 0.9%, leaving Shandong Gold with an all-Chinese lineup for its overseas float. Chinese firms dominate the Hong...

Pune, a city in India’s western state of Maharashtra, set a tight price last week for the country’s first municipal bond in over a decade, but investors are sceptical that many will follow given the poor finances of most municipal corporations. The municipality raised Rs2bn (US$31m) from 10-year bonds at 7.59% to finance a water project, beating most market watchers’ pricing expectations. Most bankers were expecting a yield north of 8% since Pune Municipal Corporation’s bonds do not have an implicit state guarantee. As it is, the issue priced...

The search for higher returns has bolstered demand for corporate perpetual securities in Singapore, driving first-half issuance to S$2.15bn (US$1.55bn), double that of the whole of 2016. Last Tuesday, Wing Tai Holdings sold a S$150m perpetual non-call five issue, bringing this year’s tally of undated bonds from corporate borrowers to seven – not including a bumper S$1bn Additional Tier 1 perpetual from HSBC Holdings. “There will be more corporate perpetual offerings this year as issuers will want to take advantage of the sharp declines in rates...

Last week was a busy one for Hong Kong-listed Road King Infrastructure, which sold its second fixed-for-life perpetual bond in five months and launched an IPO of its toll-road assets. RKI, rated B1/BB– (Moody’s/S&P), came out last Monday with the first fixed-for-life perpetual issue in Asia since the latest 25bp rate increase in US interest rates on June 14, raising US$300m for business expansion. Then, on Thursday, RKE Group, RKI’s Chinese toll-road subsidiary, started bookbuilding for a Hong Kong float that could raise up to HK$2.3bn (US$295m...

The cancellation of another acquisition in Taiwan’s cable TV industry has left lenders disappointed for the second time in three months. Telecommunications services provider Taiwan Optical Platform Group terminated its agreement to buy a 65% stake in Eastern Broadcasting last week after the National Communications Commission blocked the deal. The cancellation of a NT$13.5bn (US$443m) loan to fund the purchase is the latest setback for Taiwanese banks, coming shortly after Far EasTone Telecommunications and Morgan Stanley Private Equity Asia...

Kyobo Life Insurance is planning to issue hybrid capital securities in its first visit to the US dollar bond market, potentially setting a template for other Korean insurers looking to comply with stricter rules. The South Korean lifer has mandated JP Morgan, Citigroup, Nomura and UBS as joint bookrunners for the subordinated capital securities and is eyeing an issue size of around US$500m next month. The move comes as Korea prepares to adopt international accounting standards and stricter domestic solvency rules that will require insurers to...