REG S: Schadenbank gets into the restructuring game

Under-fire Chinese agribusiness Chaoda Modern Agriculture came out fighting last week, promising to repay its convertible bonds in full only days after S&P claimed it was about to default. S&P lowered Chaoda’s corporate credit rating to CC from CCC on February 10, claiming that the company had failed to make a payment on its US$200m due 2015/put 2013 CBs on February 7 2012 and that a default was likely. Chaoda, however, said in a stock exchange announcement on February 15 that its bonds were not due until March 2 – based on an alternative...

Over 300 of Asia’s capital markets community gathered in the ballroom of Hong Kong’s Grand Hyatt hotel on February 8 for IFR Asia’s 15th annual awards dinner. The awards themselves celebrated the most impressive deals and institutions of 2011 - a timely reminder of the kind of achievements that are possible even in difficult markets. This year’s guest speaker was the Rt Hon Alistair Darling, MP, the former UK chancellor, who took the opportunity to share some of his views on Europe’s financial future. His comparisons to the crisis of 2008, in...

Source: Reuters/Supri Supri High power lines are seen near apartment buildings in Jakarta A hugely popular bond from Indonesian utility Cikarang Listrindo last week left little doubt that global fund managers are again ready to embrace lower-rated Asian debt. With Indonesia expected to dominate new junk-rated deals, the biggest high-yield deal from Asia’s corporate sector in over six months took on an even greater significance. A spike in risk-aversion injected a cautionary tone at the end of last week, but, after Cikarang’s blockbuster, the...

Source: Reuters/Jason Lee A paramilitary policeman prevents a visitor entering the blocked area around national flag pole in Beijing China’s move to roll over local government debts has eased worries of a systemic crisis, but market participants believe further measures are still needed to restore confidence in state-backed bonds. According to a Financial Times report, banks have started extending maturities of local governments loans to avoid a wave of defaults. In some cases the maturities would be extended by as much as four years, the paper...

Source: Reuters/Supri Supri Cashiers from Indonesia’s Matahari retail department store waiting for customers in Jakarta. Less than 18 months after its Rp3.5trn (US$390.8m) leveraged buyout financing flopped in syndication, CVC Asia Pacific is looking to refinance the seven-year loan for Matahari Department Stores. Coming well ahead of maturity, the refinancing is an unusual attempt to improve on the terms of a deal signed as recently as 2010 – even though global loan margins have risen sharply over the last 12 months. The private-equity...

Source: Reuters/Danish Siddiqui A labourer pulls an underground cable at a construction site of a commercial complex in Mumbai The Indian underwriters of a struggling US$1bn acquisition loan for GVK Power & Infrastructure are turning to an unlikely source of liquidity – Europe. With global loan markets in retreat, GVK’s five Indian arrangers have been unable to attract other lenders in syndication since pre-funding the loan late last year. Now, the quintet expects European banks to extend an indirect lifeline through a series of bilateral loans...

Bank Sinopac has become the second Taiwanese lender to win China’s blessing to invest renminbi raised overseas in the onshore bond market, following approval for rival Fubon Bank in August 2011. Sinopac’s licence is the latest step in China’s gradual liberalisation of its capital account, marking the 38th such approval since the People’s Bank of China introduced new rules on offshore renminbi investment in August 2010. The ability to invest in the domestic debt market provides an added incentive for banks to boost their renminbi trade...

Regulators in India have caught on to a cunning structure that some foreign institutions have used to boost their exposure to the local corporate bond market, and are promising to enforce investment limits more strictly. A circular last month from the Securities and Exchange Board of India will further limit how foreign investors buy rupee debt, setting the stage for a litmus test of the new rules at an upcoming auction of investment quotas. The controversy centres on how institutions account for their investment limits in India’s local bonds...

At a time when investors are calling for urgent reforms to China’s IPO system, Hong Kong-listed China Communications Construction added to the controversy last week. The company priced its scaled-backed Shanghai IPO at the top of its target range even though the book was undersubscribed. CCC will raise Rmb5bn (US$793m) at the final price. However, the six banks on the deal have been forced to spend Rmb552m to take up the 102.3m unsold shares – the first time underwriters have had to take up leftover shares in a Chinese IPO since the price...

Source: Reuters/Bobby Yip A luxurious residential building developed by Henderson Land Development. Having seconds is becoming a tradition among Hong Kong property companies. Last week, yet more entities in the sector returned to the bond market to reopen hugely popular deals launched just a few weeks earlier. As the bank loan market remains tight, analysts predict that those yet to reopen their bonds may soon follow suit. Indeed, last week’s solid US$2.7bn order book for Henderson Land Development’s enlarged US$300m retap of its recently...

Jonathan Rogers, IFR Asia Senior Credit Analyst I recall, as I’m sure you will, the perp “crisis” that hit the Eurobond market in the late 1980s. In those days of dodgy hairdos and electropop, Alan Greenspan was the unquestionable Master of the Universe, and I was a junior institutional bond salesman at Nomura in London. Back then, if you happened to ask the FRN traders for a firm price on a perp, the request would be greeted with a wry smile or an ironic guffaw and a response containing a deeply discounted bid and a two-way you could drive the...

Malaysia’s CIMB and Chinese investment bank CICC are emerging as likely bidders for the Asian equities business of Royal Bank of Scotland. RBS said last month that it planned to exit the equities business entirely, either by selling it or closing it. While CIMB and CICC declined to comment on the rumours, RBS said in a statement: “RBS remains in active discussions with other third parties interested in acquiring various parts of the businesses it has identified for exit. Further updates will be provided based on developments.” It did not name...