Payment in kind of a bad way

Payment-in-kind has taken a turn for the worse in Asia’s bond market, with flight tickets and pork being offered instead of cash. Aviophobic vegetarians are up in arms.

  • By Taipan
  • 22 Nov 2018
Email a colleague
Request a PDF

Qianhai Air & Shipping Exchange, a subsidiary of China’s HNA Group, has apparently misunderstood the meaning of ‘bond coupon’ — it is planning to repay its bondholders with coupons for flight tickets instead of cash. This follows the news that Chuying Agro-Pastoral Group, a pork producer, will give its own investors ham or ‘pork gift packets’ instead of interest payments.

It seems unlikely that investors will have been happy with the idea of taking flight coupons or hock ham instead of hard currency, but perhaps this is simply the latest market innovation.

Companies could use this novel solution en masse, reducing their refinancing risk and creating a whole new customer base in one fell swoop. Phone companies would redefine the meaning of a ‘call option’. Stair-makers would offer investors a ‘step-up’. What about covenant packages? Buy church bonds if you want those delivered to your door.

The problem with all this is that some companies will have more luck than others. De La Rue, which prints money, will be embraced by investors. Aqualia, which treats sewage, will probably not.

Since this situation is frightfully unfair, it might be best for issuers to adopt another strategy. Rather than a company giving its product to bondholders in lieu of cash, it could sell the product and use the cash to pay them back money instead. We haven’t worked out the details of this innovative strategy yet, but we’ll let you know when we do.

In fairness, Chuying Agro-Pastoral has said the bulk of its bond will be repaid in cash. Investors could be forgiven for wondering if the company is telling porkies.

  • By Taipan
  • 22 Nov 2018

Panda Bonds Top Arrangers

Rank Arranger Share % by Volume
1 Bank of China (BOC) 21.17
2 China Merchants Securities Co 17.84
3 Industrial and Commercial Bank of China (ICBC) 14.86
4 Agricultural Bank of China (ABC) 10.81
5 China Securities 9.01

Bookrunners of Asia-Pac (ex-Japan) ECM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 CITIC Securities 8,165.85 33 9.72%
2 Goldman Sachs 6,894.63 24 8.21%
3 Morgan Stanley 4,815.98 33 5.73%
4 UBS 4,491.81 28 5.35%
5 China International Capital Corp Ltd 4,340.56 23 5.17%

Bookrunners of Asia Pacific (ex-Japan) G3 DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 15,042.14 131 8.44%
2 Citi 10,101.99 81 5.67%
3 JPMorgan 9,703.04 62 5.44%
4 Credit Suisse 6,502.92 50 3.65%
5 Bank of America Merrill Lynch 6,256.12 50 3.51%

Asian polls & awards

  • GlobalCapital Asia capital markets awards 2018: Investment banks

    In the fourth and final instalment of GlobalCapital Asia’s capital markets awards announcements, find out the Best Asian Investment Bank and the Best Investment Bank in the region for 2018.

  • GlobalCapital Asia capital markets awards 2018: Bonds

    In part three of our results announcements, we reveal the winning bond deals across a variety of categories. In addition, we also name the Best G3 Bond House, Best Local Currency Bond House, Best High Yield Bond House and the debut winner of the Best House for SRI Financing.

  • GlobalCapital Asia capital markets awards 2018: Equities

    In part two of our results announcements, we reveal the winning equity deals and banks, including the Best Follow-on/Accelerated Bookbuild, Best Equity-Linked Deal, Best IPO, Best ECM Deal and Best ECM House.

  • GlobalCapital Asia capital markets awards 2018: Loans

    GlobalCapital Asia has spent the last two months talking to banks and their clients in a bid to determine the most impressive capital markets transactions and advisers across Asia ex-Japan in 2018. We are pleased to begin our awards announcements in the loan market.

  • GlobalRMB awards: Most impressive issuers, best law firm

    In this third part of the GlobalRMB awards, we present our reasons for choosing the best issuers in the FIG, corporate and SSA categories — and praise the strong performance of one well-known foreign law firm.