Reg S:1041

Dozens more Chinese companies are lining up to sell offshore bonds, adding to the pressure on a market already buckling under the weight of supply. Faced with tougher financing conditions at home, Chinese issuers are swamping the US dollar bond market even as rising US interest rates, weaker demand from mainland investors and growing default risks are causing a severe imbalance of supply and demand. The National Development and Reform Commission, China’s main regulator for offshore financings, has awarded quotas to 80 issuers in the past month...

The planned Shanghai IPO of Foxconn Industrial Internet is emerging as an important template in China’s push to attract more listings from the world’s biggest technology companies. Earmarked to fund Rmb27bn (US$4.24bn) of investments, the biggest A-share IPO since the 2015 crash comes with a sizeable strategic tranche, limited retail clawback and no pre-agreed size – all big departures from the mainland standard. The format proves that big deals can win regulatory approval in the mainland market, at a time when China is pushing to attract high...

Two Chinese bitcoin mining equipment makers are set to test equity investors’ faith in the cryptocurrency’s long-term future with plans to raise up to US$1bn each in the world’s largest bitcoin-focused IPOs to date. Canaan applied to the Stock Exchange of Hong Kong last week for a listing while Zhejiang Ebang Communication has started working with advisers on a Hong Kong float, according to people familiar with the situation. Although the price of bitcoin has tumbled 35% this year and Beijing has tightened its grip on trade in the virtual...

Indonesian power utility Perusahaan Listrik Negara, rated Baa2/BB/BBB, sold two long-dated tranches of US dollar bonds on Tuesday, even though the 10-year Treasury yield hit a seven-year high during bookbuilding. PLN priced a US$1bn 5.45% 10-year at 99.619 to yield 5.5%, and a US$1bn 6.15% 30-year at 99.323 to yield 6.2%. The two tranches came 30bp inside initial guidance of 5.8% area and 6.5% area, respectively. But the state-owned borrower had to pay a hefty price to engage investors in rough markets. The coupon on the 30-year is the...

The Tokyo listing of second-hand goods marketplace app Mercari is set to offer investors a rare opportunity to buy into a Japanese technology unicorn. High-growth stocks are few and far between in the mature Japanese market, and bankers are hoping that a successful debut will stoke demand for more “new economy” listings. Mercari, which has recorded over 100 million downloads of its flea market app worldwide, is ticking all the boxes to ensure that the country’s largest IPO for the year so far is a success. The company is offering 43.6m shares...

Virgin Australia Holdings pushed Australia’s developing high-yield bond market further down the credit curve with the first low Single B rated offering. The 8.25% five-year non-call three medium-term note raised a creditable A$150m (US$113m). It priced at par, in line with initial low 8% area price talk and final 8.25% area guidance. The senior unsecured bond arranged by joint lead managers ANZ, HSBC and UBS is rated B3/B– (Moody’s/S&P), at the bottom of the Single B spectrum, one and two notches below the issuer’s B2/B+ ratings, respectively...

Mitsubishi UFJ Financial Group will implement a major revamp as it looks to increase earnings from corporate and investment banking overseas by more than a half over the next three years. Japan’s largest bank detailed plans during an investor presentation last Tuesday to reorganise the group along international and domestic lines as part of a new medium-term business plan. The shift comes as MUFG steps up its bet that overseas growth will supplement flagging earnings from Japan, after reporting lower income from its domestic business for the...

Lloyds Banking Group is delaying plans for a Singapore dollar bank capital offering after rising rates made the local market less competitive. “The deal’s not on for the time being,” said one banker involved in the transaction. “Lloyds is now exploring alternative funding markets for its Tier 2 bonds.” Another source said Lloyds would continue to monitor the local market for an opportunity to print. DBS, HSBC and Standard Chartered are joint lead managers for the potential issue. Since announcing its plan for the Tier 2 issue on May 2, the...

Asian banks and institutional investors ended up with much less of I-Med’s A$690m (US$519m) buyout loan than they expected folowing a strong response for the deal, underlining the growing appetite for high-yielding financings in the region. The transaction, which finances global private equity firm Permira’s acquisition of Australia’s largest medical imaging network from EQT Partners and other shareholders, attracted 28 banks and institutional investors in general syndication. All 28 recommitted to the deal, despite a 25bp reverse flex on the...

Indian non-banking finance companies (NBFCs) are turning to the retail bond market to manage their funding costs, after a spike in short-term yields and tighter rules for electronic bidding pushed up the cost of institutional placements. Issuers could raise as much as Rs400bn–Rs500bn (US$5.9bn–$7.4bn) from retail-targeted public offerings in the coming months, according to Ajay Manglunia, head of fixed income at Edelweiss Financial Services. Srei Equipment Finance raised Rs5.31bn from a three-tranche public issue last week. Dewan Housing...

Nagacorp, which owns and operates the only integrated casino and hotel resort in Phnom Penh, has become the first Cambodian issuer of offshore bonds, overcoming a weak Asian high-yield market. The company last Monday priced US$300m 9.375% three-year non-call two bonds at 99.362 to yield 9.625% via joint global coordinators and bookrunners Credit Suisse and Morgan Stanley. Final pricing was inside initial guidance of 9.75% area. The bonds are expected to be rated B1/B (Moody’s/S&P), in line with the Hong Kong-listed issuer. Moody’s rating is one...

Japan Post Bank, one of the country’s biggest institutional investors with ¥207.7trn (US$1.89trn) under management, is to increase its allocation to credit and alternative investments in a bid to improve returns. The bank, also known as Yucho Bank, said in its medium-term plan for FY2018 to FY2020 that it would reduce its allocation to yen interest rate products such as JGBs to 55% of its portfolio from 61% as of end-March 2018. It will increase its allocation to credit to 41% from 39% and expand its strategic investment to 4% of its assets...