REG S: Reg widens his search for a new client

India’s Rural Electrification Corp is choosing to take on currency exposure of around US$28m a year to save some 170bp on the coupon rate on a rupee bond. The state-run utility has issued a mandate for a local Rs15bn (US$304m) deal to be sold at a fixed rate, and then swapped into a spread over yen-Libor. To old hands in India, the structure sounds almost too familiar. In 2006, the Reserve Bank of India had barred banks from swapping their rupee-denominated bonds into yen-Libor due to systemic risks. The rule, however, was never extended to...

Source: Reuters/David Gray A security guard stands outside a branch of the Bank of Communications located in central Beijing The decision by Bank of Communications to opt for a jumbo private placement shows that Chinese lenders are taking no chances with their capital-raising plans. In the last couple of weeks, a number of successful block trades across Asia have raised confidence in public fundraisings, but two sources close to BoCom told IFR the lender was planning to raise about Rmb50bn (US$7.9bn) through a private placement of its Hong Kong...

Chinese banks, which have more than Rmb50bn (US$7.83bn) of negotiable CDs due this year, are starting to feel a squeeze from the arrival of foreign credits in the offshore renminbi market. In some cases, Chinese banks are paying nearly three times more than they did last year as spoilt investors demand yields more commensurate with the levels foreign issuers pay. Tighter renminbi liquidity is also to blame, but bankers in Hong Kong say that this alone does not warrant the rise in funding costs to the extent they have. There have been some clear...

India’s Power Finance Corp sent out a revised request for proposals in the week of February 6 for a US$250m three-year loan in a move to lower its funding costs. If successful, the move may well open the floodgates for other Indian companies seeking cheaper offshore funding at a time of tight loan markets. The revised RFP went out barely a month after PFC sought lenders for a US$250m five-year loan. PFC’s switch to a three-year tenor – a rare maturity in the Indian corporate sector – highlights the greater appetite and deeper liquidity for a...

Source: Reuters/Crack Palinggi Workers maintain a power plant station in Jakarta. Indonesian utility Cikarang Listrindo is taking advantage of a sudden spike in demand for Asian high-yield bonds as it looks to replace its existing bonds with a new financing with less restrictive covenants. On Friday, the company was on track to successfully complete a tender offer and simultaneous new debt offering, even as bondholders cried foul. Last week was the early bird date for Cikarang’s tender offer for its outstanding US$300m 9.25% senior notes due...

Source: Reuters/Damir Sagolj A vendor is reflected in a mirror at his small shop outside a Tesco Lotus supermarket in central Bangkok Tesco Lotus Property Fund became the first IPO in South-East Asia to begin premarketing this year in a trade that will be the largest Thai float in five years. The fund, which the Thai unit of Britain’s largest supermarket chain owns, is heading a queue of real-estate deals in the region. The IPO is expected to be of a size of around Bt17bn (US$550m) and the sponsor will take up around a third of it, with the...

Source: Reuters/Steven Shi Employees hold a meeting inside the headquarters office of Alibaba (China) Technology Co. Ltd on the outskirts of Hangzhou Chinese e-commerce company Alibaba Group plans to take its Hong Kong-listed unit private as part of a complex restructuring that also calls for a US$3bn syndicated loan. It is working with shareholder Yahoo on an asset-swap deal that may give the US company a direct stake in one of Alibaba Group’s operating businesses. Sources said that taking listco Alibaba.com private was only one of the...

Source: Reuters/Daniel Munoz An office worker walks next to a National Australia Bank branch in central Sydney National Australia Bank eased fears of a further spike in local funding costs in the week of February 6 as it reopened the senior unsecured market at a tighter price than expected. Priced on February 8, NAB’s A$1.5bn (US$1.6bn) five-year benchmark was the first senior unsecured deal since the arrival of covered bonds forced credit spreads dramatically wider in Australia’s local debt markets. The final price of 185bp over swaps was well...

Source: Reuters/Bobby Yip Vincent Lo, chairman of Shui On Land. After being shunned for the past year, Chinese property companies are finally regaining their access to the international credit markets. Outstanding bonds have recovered from their lows, and a recent slew of popular deals from Hong Kong-based developers have allowed two mainland companies, China Overseas Land & Investment and Shui On Land (See China Debt capital markets), to tap the markets. They were not exactly the kind of deals that made so many headlines last year, as both...

The Hong Kong Monetary Authority last week relaxed rules on renminbi holdings in a bid to stem the decline of interest in the currency. The HKMA’s move on February 9 will allow renminbi liquid assets to be included in banks’ statutory liquidity ratios. “[It is] a move that seems to be targeted at stemming the recent drop in renminbi deposits in Hong Kong. New regulations allow banks in Hong Kong to take more renminbi exposure. Renminbi liquid assets can now be used to cover non-renminibi liabilities. We see this as a positive development for...

Jonathan Rogers, IFR Asia Senior Credit Analyst Debt restructuring is alive and kicking (if that’s the right term) in Asia. And that should be a sobering thought for anyone enjoying the frenzy of new bond issues from the region. But the game has changed over the years, from one which was dominated by stodgy, government-owned restructuring agencies in the wake of the 1997 Asian financial crisis to one in which private sector, profit-driven restructuring advisers hog the action. There’s no doubt that these advisers – many of which, like...

Nachum Kaplan, IFR Asia Pacific Bureau Chief “It’s very tough being a bank right now. A few years ago it was a party, but now it really is tough.” That was how the head of investment banking at a major international bank in Asia described the situation this week. He has a point. Every asset class is in some kind of trouble and banks are grappling with plenty of internal challenges too. Let’s start with bonds. Yes, the G3 market is on fire – literally, as one wit recently quipped – but this reflects more a fear of the future than it does...