These 30 deals defined Asia’s capital markets in 2017

Record year for Asia G3 bond issuance and strong ECM activity bring wealth of unique deals at this year's The Asset Triple A Regional House and Deals Awards

IN another year of record volume issuance in Asia G3 bond market and a robust pick-up in IPO activity, we are spoiled for choice in selecting the best deals in Asia, outside of Japan and Australia, for The Asset Triple A Regional House and Deals Awards 2017.

As of December 15, Thomson Reuters’ figures show that Asia G3 bond issuance amounted to US$325.84 billion, which already exceeded the previous record of US$218.84 billion in 2016. Of the amount, China accounted for 46% or US$149.9 billion, which was also 71.6% larger than its issuance of US$87.15 billion in the whole of 2016.

The equity capital markets (ECM) also demonstrated a strong level of activity with volume amounting to US$202.12 billion as of December 15 this year, compared to over US$218.53 billion in the whole of 2016. There was a substantial pick-up in the IPO activity, as total value reached over US$73.69 billion, according to Thomson Reuters’ figures. This was up 17.3% from US$62.84 billion in full year 2016.

While the robust IPO activity was evident in such markets as India and Thailand, it was the China-related transactions that underpinned the volume this year as they amounted to US$42.23 billion as of December 15, almost matching the total 2016 volume of US$42.79 billion.

Two of the significant Chinese IPOs this year were the US$1.75 billion offering for ZhongAn Online P&C Insurance Company, which was listed in September, and the US$1.226 billion share sale for China Literature, which was listed in November. Both rode on the strong investor sentiments for tech companies, backed by strong shareholders and participation by cornerstone investors.

Priced at the top of the marketed range, ZhongAn was the first large-scale fintech company listing in Hong Kong with over HK$230 billion (US$29.50 billion) worth of funds frozen following a massive oversubscription. On the other hand, China Literature, which was also priced at the top of the range, was the first overseas listing of a Chinese online literature company and achieved the highest ever retail oversubscription for Hong Kong technology IPOs.

But it was the US$741 million offering for Vincom Retail that earned The Asset editors’ nod as the best IPO in 2017. It was the largest equity offering in Vietnam and featured an innovative, first-of-a-kind, put-through structure utilized in order to shorten the settlement cycle and market risk. It was definitely a transaction more challenging to execute for such a frontier market, with the company ably navigating and addressing all the concerns aired by investors during the roadshow.

The best equity-linked deal was the US$1 billion exchangeable by Shanghai International Port into H-shares of Post Savings Bank of China. It was the largest ever exchangeable bond issuance by a Chinese issuer and the deal was structured into two individual tranches, effectively breaking it up into two distinct offerings to draw the maximum demand from different pockets of outright accounts.

In fixed income, the US$2 billion dual-tranche bond by Paiton Energy was the winner of the best bond award this year. It was the first US dollar project bond in Asia since 2000, establishing a benchmark for other project or infrastructure bonds from documentation and pricing perspectives. It was also the largest bond issuance ever from the Indonesian private sector and achieved record low yields for an Indonesian private sector corporate.

For relieving pressure on government liquidity and the country’s external position, the Government of Mongolia’s (GoM) exchange offer and US$600 million new bond was voted as the sovereign bond deal of the year. The transaction came as the International Monetary Fund in early 2017 considered Mongolia’s debt stock not sustainable. Electing to undertake market-driven solutions, the sovereign executed in March an exchange of US$476 million notes issued by the Development Bank of Mongolia (DBM) into new seven-year GoM notes, replacing US$580 million of DBM notes with US$600 million of GoM debt due 2024.

The significance of this transaction was manifested in the succeeding deal in October in which the GoM priced a US$800 million new issue in conjunction with its any-and-all cash tender offers of its outstanding US$500 million bonds due 2018 and CNH one billion due 2018. The tender was the first ever in Asia that encompassed two currencies to be funded by a US dollar benchmark. The coupon in the new notes was 312.5bp tighter at 5.625% than the March trade, which paid 8.75%.

There were other significant sovereign bond transactions this year, including the US$2 billion dual-tranche offering from the ministry of finance of the People’s Republic of China (MOF China) in late October, which achieved the lowest spread for any Asian or emerging market issuer. This represented MOF China’s return to the US dollar bond market after 13 years and marked Asia’s first ever unrated US dollar sovereign bond offering. The tightly-priced deal was highly anticipated by the market with the order book peaking at US$22 billion, leading to some suggestions that perhaps MOF China could have priced the deal anywhere it wanted.

Postal Savings Bank of China printed in September the largest ever additional tier 1 (AT1) capital securities from a Chinese commercial bank at US$7.25 billion, which was also the largest ever single-tranche Asian US dollar offering to date. Voted as the best bank capital bond, it achieved the lowest ever spread over the US treasuries among all Chinese AT1 instruments at 263.4bp.

China’s e-commerce giant Alibaba Group Holding returned to the US dollar bond market following its US$8 billion debut in November 2014 with another blockbuster transaction – this time for US$7 billion. The five-part offering was focused on the long end of curve that included a 40-year tenor, the first such maturity from an Asian issuer in over two decades. The deal was 5.4x covered with an order book of US$38 billion.

Press Metal Aluminium Holdings rode on its rarity value to successfully price in October a US$400 million senior note and won the best new bond award. This was the first US dollar high yield rated corporate issuance out of Malaysia over the past decade, with the final order book more than 9.5x oversubscribed.

The US$2.15 billion equivalent dual-currency issuance by Industrial and Commercial Bank of China, Luxembourg branch, was chosen as the best green bond. This was the first Belt and Road climate bond and the first green bond issued in alignment with both the International Capital Markets Association (ICMA) and People’s Bank of China green bond categories by a Chinese financial institution.

This year saw the launch of a new asset class in the global debt capital markets with the pricing of the first “Komodo” bond by Indonesian state-controlled toll road developer and operator Jasa Marga in November. Similar to the concept of dim sum bond and Masala bond, the four trillion rupiah (US$295 million) offering – voted as the best local currency bond – is denominated in rupiah, but payments of principal and interest will be made in US dollars.

In structured finance category, one of the highest profile transactions in 2017 was the US$4.65 billion syndicated credit facilities for Nesta Investment Holdings, the consortium that acquired Global Logistic Properties. This was The Asset’s choice as the best LBO and it represented the largest ever private equity buyout of an Asian company and the largest ever M&A in Singapore.

 

For the complete list of winning regional equity deals, please click here.

For the complete list of winning regional fixed income deals, please click here.

For the complete list of winning regional M&A/structured finance deals, please click here.

Date

19 Dec 2017

Channel

Awards

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