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Green Finance / Treasury & Capital Markets
Kexim, sovereigns lead 2023 G3 bond issuance
Strong focus on sustainability as Asian issuers take advantage of recent falling yields
Chito Santiago 5 Jan 2023

Three of the most frequent issuers kick-started the issuance of G3 bonds in Asia, outside of Japan and Australasia, in 2023 with large offerings and a focus on sustainable finance. The deals, priced on January 4, generated strong demand from investors, which augers well for the other issuers that also announced their fund raising when the market opened for business in the new year.

One of South Korea’s policy banks, the Export-Import Bank of Korea (Kexim), printed a three-tranche SEC-registered offering totalling US$3.5 billion, including a blue bond. The deal comprised of a three-year note amounting to US$1 billion with a coupon of 4.875% and a spread of 85 basis points (bp) over the US treasuries. This was in line with the final price guidance and 35bp tighter than the initial price range in the area of 120bp.

The second tranche was a five-year bond amounting to US$1.5 billion with a coupon of 5% and a spread of 120bp over US treasuries. This was also in line with the final price guidance and 35bp inside of the initial price guidance in the 155bp area.

The third tranche was a 10-year blue bond amounting to US$1 billion with a coupon of 5.125% and a spread of 145bp over US treasuries. This was likewise in line with the final price guidance and 35bp back of the initial marketing range in the 180bp area.

The deal garnered a total order book of US$17 billion with the three-year bond attracting US$4.9 billion from 195 accounts, the five-year bond US$5.7 billion from 234 accounts and the 10-year bond US$6.4 billion from 186 accounts.

The proceeds for the three- and five-year bonds will be used for general operating purposes, including extending foreign currency loans and repayment of maturing debt and other obligations. The proceeds for the blue bond will be allocated to finance or refinance new or existing projects related to sustainable marine transportation in accordance with Kexim’s framework for blue bond issuance, which supplements its existing sustainable finance framework established in September 2021.

ANZ, BNP Paribas, BofA Securities, Citi, HSBC, KB Securities and Morgan Stanley acted as the joint bookrunners and lead managers for the transactions.

The Republic of Indonesia became the first sovereign to access the G3 bond market in the region as it also priced a three-tranche offering to raise a total of US$3 billion.

The issuance consisted of a five-year bond amounting to US$1 billion, which was priced at 98.900% with an interest rate of 4.55% per annum and a re-offer yield of 4.80%. This was 35bp tighter than the initial price guidance in the area of 5.15%.

The second tranche was a 10-year bond amounting to US$1.25 billion, which was priced at 98.061% with an interest rate of 4.85% per annum and a re-offer yield of 5.10%. This was 40bp inside of the initial price range of 5.50%.

The third tranche was a 30-year bond amounting to US$750 million, which was priced at 98.578% with an interest rate of 5.65% per annum and a re-offer yield of 5.75%, or 40bp inside the initial price guidance in the 6.15% area.

The three-tranche issuance attracted a total demand of US$14.45 billion, with the five-year bond netting an order book of US$3.6 billion from 195 investors. The 10-year paper garnered US$4.7 billion worth of orders from over 245 accounts, while the 30-year bond generated the biggest demand at US$6.15 billion from more than 285 accounts.

BofA Securities, DBS, HSBC, Mandiri Securities and Standard Chartered were the bookunners for the deal, while BRI Danareksa Sekuritas and Trimegah Sekuritas Indonesia acted as co-managers.

The Hong Kong Special Administrative Region (HKSAR) was also among the early issuers to take advantage of the constructive G3 bond market in the region as it printed multi-currency, multi-tranche green bond transactions totalling about US$5.78 billion equivalent. This represented its largest-ever green fund raising, which will finance eligible green projects that will provide environmental benefits and support the sustainable development of Hong Kong.

The issuance comprised of a four-tranche US dollar offering totalling US$3 billion – three-year (US$500 million), five-year (US$1 billion), 10-year (US$1 billion) and 30-year (US$500 million). Investors piled into the deal, enabling HKSAR to tighten the pricing.

The Reg S/144A deal generated a total order book of US$27.74 billion, with the three-year paper attracting demand worth US$4 billion from over 175 accounts. The five-year bond garnered an order book of US$7.14 billion from more than 250 investors, while the 10-year bond achieved a total demand of US$8.35 billion from over 300 accounts. The 30-year paper received orders worth US$8.25 billion from 315 investors.

The transaction also accessed the offshore yuan market for a two-tranche offering totalling 10 billion yuan (US$1.45 billion) – equally split at 5 billion yuan each for two years and five years. This issuance generated a total order book of 33.61 billion yuan, with the two-year paper garnering demand of 21.67 billion yuan and the five-year bond 11.94 billion yuan.

HKSAR also accessed the euro bond market for a dual-tranche offering totalling €1.25 billion (US$1.33 billion). It consisted of a two-year bond amounting to €750 million and a five-year bond amounting to €500 million, which attracted a combined order book of €3 billion from 110 accounts.

Crédit Agricole CIB, HSBC, Citi and J.P. Morgan were the joint global coordinators for both the US dollar and euro bond offerings, as well as the joint bookrunners and lead managers, along with BNP Paribas, BofA Securities, Morgan Stanley and UBS.

For the offshore yuan issuance, Crédit Agricole CIB, HSBC, Bank of China (Hong Kong) and ICBC (Asia) were the joint global coordinators for the transaction, as well as joint bookrunners and lead managers, together with Bank of Communications, Mizuho Securities and Standard Chartered. Crédit Agricole CIB and HSBC were also appointed joint green structuring banks.

Other Asian issuers are joining the rush to tap the G3 bond market, as they take advantage of the falling bond yields during the past couple of months. They include the Airport Authority Hong Kong, SK Hynix, Sunny Optical Technology and POSCO.

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