BANGLADESH
Bangladesh Power Development Board – Chapainawabganj 100MW HFO Power Plant $112m multi-ECA financing
Mandated lead arranger: HSBC
Bangladesh has an ambitious target for power generation and the Chapainawabganj 100MW HFO Power Plant was probably its most difficult project to date in terms of location in the North West of the country.
It also provided a number of funding challenges for mandated lead arranger HSBC. China’s Sinosure and Finland’s Finnerva were the export credit agencies for the project and as is standard, they were only able to provide guarantees for 85% of the financing. But as this project needed to have 100% of the financing in place, HSBC provided a loan for the remainder.
The reason for a full financing package is because in Bangladesh, payment for the equipment for the project has to be done through letters of credit (LC). But getting Bangladesh banks to provide LCs for such large amounts is difficult. But having 100% of the funding in place mitigated the risk for the banks and allowed them to get comfortable enough to issue the LC.
Adding to the complications, Sinosure’s rules also required a Chinese bank to provide a minimum of 70% of the funding it was backing so HSBC brought its affiliate lender Bank of Communications into the transaction.
HONG KONG
GF Securities Co HK$32bn ($4.13bn) IPO
Joint sponsors: GF Capital (Hong Kong) and Goldman Sachs. Joint global co-ordinators: Bank of America Merrill Lynch, BoCom International, Deutsche Bank, GF Securities (Hong Kong) Brokerage, Goldman Sachs and Morgan Stanley. Joint Bookrunners: ABCI Capital, CCB International Capital, China Merchants Securities, China Securities, CIMB Securities, Guosen Securities, Huatai Financial Holdings, HSBC, ICBC International, Industrial Securities and Sun Hung Kai Investment Services
Financials dominated equity activity in Hong Kong last year and GF Securities Co’s HK$32bn ($4.13bn) juggernaut was the one that started it all.
But the journey was far from smooth. The mandate for the IPO had been sitting on bankers’ desks for the better part of four years, as the issuer bided its time to make the jump from A-share to dual listing. When 2015 rolled around, it finally got its chance.
The IPO is a landmark on a number of counts. At the time of pricing, it was the largest IPO for a securities firm globally, the largest IPO in Asia ex-Japan since 2011, and the largest overseas IPO by a Chinese broker. In all, 15 new listings from the finance and insurance sector raised $16.22bn in Hong Kong in 2015.
GF’s success was down to the concerted effort of the leads to reach out to investors early in the process. The move helped drum up $1.9bn worth of demand from 18 cornerstone investors, who mopped up over 50% of the shares even before bookbuilding started.
From there it was only a matter of time before hundreds of global accounts flooded into the trade. Pricing, unsurprisingly, came in at the top of its HK$15.65-HK$18.85 guidance.
While larger IPOs followed, by coming first GF Securities became the standard bearer for Hong Kong. The deal also won our award for Best IPO in Asia.
Coal India Rp225.6bn ($3.3bn) offer for sale
Bookrunners: Bank of America Merrill Lynch, Credit Suisse, Deutsche Bank, Goldman Sachs, JM Financial, Kotak Securities, SBI Capital Markets
Bankers had been hoping 2015 would be a bumper year for equity activity in India. The government’s divestment programme and a pick-up in corporate activity meant the pipeline was strong. And it was Coal India’s Rp225.6bn offer for sale that got the year off to a good start in January.
Launched at a base size of 315.82m shares, the trade closed at double that thanks to overwhelming demand from institutional investors. Asian and US funds bagged most of the trade with the institutional book subscribed 1.22x. This demand came despite the deal pricing at a discount of 4.5% to its last close and the transaction being 205 times the stock’s average daily trading volume.
As well as setting the tone for the year, getting this deal right was key to the government’s strategy of selling down stakes in state-owned companies to boost its coffers. The Coal India deal certainly met this goal as the 10% stake accounted for 93% of the divestment programme in the 2015 fiscal year. At the time of pricing, the trade was also the biggest equity market transaction in India since the global financial crisis.
INDONESIA
Aeronautic Investments 18 $143.7m bond due 2025
Sole bookrunner: BNP Paribas
Southeast Asia is one of the fastest growing regions for airlines but that also means it is an area where there is strong competition for financing.
To solve this problem, BNP Paribas has been using a structure from Europe and the US that uses guarantees from export credit agencies to fund aircraft purchases. What makes Aeronautic Investments 18 $143.7m bond standout is it is the first transaction to be targeted at and sold into an Asian investor base.
Indonesia’s Lion Air Group was looking for financing for affiliate Transportation Partners to fund the purchase of turboprop aircraft. It was buying 10 aircraft from ATR, a joint venture between France’s Airbus and Italy’s Finmeccanica.
By while previous deals for Lion Air had used credit guarantees from Export-Import Bank of the United States, the fact that this transaction involved buying aircraft from a part French company allowed BNP Paribas to reach out to France’s ECA Coface.
The use of Coface brought its own challenges. The presence of US Exim meant that US accounts had bought the previous deals but Coface backing the bond meant that BNP Paribas had to find a new investor base and so spent time educating Asia investors about the ECA structure and also Coface. Also, carrying out extensive investor education meant that Transportation Partners did not need to get a rating for the bond which was sold by special purpose issuer Aeronautic Investments 18.
The resulting $143.7m 10 year bond managed to price at three month Libor +0.87%, substantially lower than the borrower’s outstanding export credit loan. The trade is also Coface’s first guaranteed bond transaction for an Asian client and is the first ECA bond in Reg S format targeting Asian investors.
MALAYSIA Petroliam Nasional (Petronas) $5bn conventional and sukuk bond – $1.25bn due 2020, $750m due 2022, $1.5bn due 2025 and $1.5bn due 2045
Active joint bookrunners: Bank of America Merrill Lynch, CIMB, Citi, JP Morgan, Morgan Stanley
Passive joint bookrunners: Deutsche Bank, HSBC, Maybank, MUFG
In a crowded field, Petronas is our pick for best Malaysia deal as it demonstrated top-notch timing and execution that allowed the borrower to navigate through the unfavourable conditions surrounding the sector and the country.
The weak commodities market meant the state-owned oil company found itself in a tough position ahead of its first dollar outing in five years.
But A1/A- rated Petronas had to come to the market as the sovereign wanted it to set a good benchmark for its own upcoming dollar bond. While it is more typical for a sovereign to go first, Petronas carries a higher rating than the sovereign’s A3/A-.
With a plan to raise $5bn in conventional bonds and sukuk, each tranche had a different tenor – five year sukuk as well as seven, 10 and 30 year conventional notes.
And despite the company’s long hiatus, orders poured in with the 30 year proving the most popular thanks to demand driven by Taiwanese insurance companies. Petronas eventually sold the bonds at 110bp over Treasuries, 130bp over, 150bp over and 190bp over across the four tranches, repricing its existing secondary yield curve by 15bp-25bp. It also set a solid foundation for the sovereign to return one month later. The deal also won our award for Best Investment Grade Corporate Bond in Asia.
MONGOLIA
Trade & Development Bank of Mongolia $500m bond due 2020
Bookrunners: Bank of America Merrill Lynch, Deutsche Bank and ING Bank
Selling Mongolia credit has been a tough ask in recent years and things were not looking good at the start of 2015 after the government reached out to the International Monetary Fund for support in February.
But when leads Bank of America Merrill Lynch, Deutsche Bank and ING Bank opened books for Trade & Development Bank of Mongolia’s five year bond in May, they were confident about the deal’s chances. This was despite the borrower failing to print a deal the year before and the absence of Mongolian credits from the bond market since 2013.
The confidence was thanks to the inclusion of a government guarantee, the first under a new Debt Management Law that meant the trade carried 100% state backing.
The gambit worked and the leads were able price the bond at 9.375%, 40bp under initial price thoughts. While Asian investors showed muted interest in the deal, there was strong demand from European and US accounts which drive the order book to over $2.3bn and allowed the borrower to raise $500m.
PAKISTAN Habib Bank Prp102.4bn ($1bn) divestment by the Government of Pakistan
Bookrunners: Arif Habib, Credit Suisse, Deutsche Bank and Elixir Securities
The divestment of a 41.5% stake in Habib Bank by the Government of Pakistan is a genuine landmark in capital markets. The trade is the largest ever equity offering in Asian frontier markets and has been singled out as one of the catalysts for a possible rerating of Pakistan into the MSCI Emerging Markets index.
But the leads had to work hard to get the transaction to that point. First, they had to overcome investor fear that the government might back out of the transaction after it pulled a divestment for Oil & Gas Development Corp (OGDCL) in November 2014 when investors were less than happy with the pricing. To get investors on board the Habib Bank team conducted extensive investor education to calm fears and also identify key accounts to anchor the trade.
There was also a debate about whether to do the transaction as a GDR. While a GDR may have been easier, the leads felt a domestic placing would be better for the development of Pakistan capital markets and from the roadshow they were confident about the ability to get foreign investors to buy into the country’s domestic markets.
While the government always wanted to raise the full amount, it was decided to launch the trade at a base size of 250m shares or 17% of the bank’s equity, with an upsize option for another 359m shares.
But 26 hours before the sale was due to close that confidence was looking misplaced. While the base size was covered, some key investors had yet to place order which meant that there was little chance of the upsize option being exercised.
Thankfully, with 12 hours to go the orders started to come in and the book closed with enough to raise the full Prp 102.4bn with foreign investors taking 80% of the trade, more than double the total net foreign inflows into Pakistan in 2014.
PHILIPPINES Monde Nissin Corporation’s £550m ($768m) loan due 2018
Mandated lead arrangers: Bank of the Philippine Islands, BDO Unibank and Metrobank
Monde Nissin’s decision to buy UK based Quorn Foods was a real landmark for the company. While it is one of the biggest food companies in the Philippines the agreed price of £550m made it one of the biggest overseas acquisitions ever undertaken by a southeast Asian company.
Yet while the M&A is noteworthy, this award goes to a £550m three year loan used to back the purchase.
Mandated lead arrangers Bank of the Philippine Islands, BDO Unibank and Metrobank funded the loan as a club which meant the money was committed quickly, allowing Monde Nissin to win the acquisition ahead of other private equity and trade bidders.
While the size of the lending facility may not seem big by global or even Asian standards, the fact that the whole loan could be funded by Philippine banks shows how far that market has come and the ability of local lenders to fund the growing ambitions of its major corporates.
SINGAPORE
STATS ChipPac $425m bond due 2020
Bookrunners: Barclays, DBS and ING Bank
When Singapore semiconductor manufacturer STATS ChipPAC agreed to be taken over by Jiangsu Changjiang Electronics Technology it had to offer to buy back its 5.375% 2016s and 4.5% 2018s at 101% due to the change of control.
But because the change of control buy back was not guaranteed to clean up all the outstanding deals, at the same time STATS ChipPAC launched a cash tender offer to purchase all the notes at 101.25%
To partly fund the repurchase STATS ChipPAC secured a $538m bridge loan from DBS which it then planned to refinance with a new bond.
But just as a window opened to sell the bond, China’s National Development and Reform Commission announced a new set a rules for foreign debt issued by Chinese borrowers that requires registration of any deal prior to launch. With STATS ChipPAC now under Chinese ownership, the bond was put on hold while it got the new documentation in place.
With all the boxes finally ticked, the borrower went on a dual-team global roadshow in November. However, halfway during the process the Paris bombings took place, putting markets back into risk off mode.
After weighing up the options, the leads decided to go ahead with the transaction after receiving strong indications of interest before any price guidance was announced.
The decision was the right one, with the $425m 8.5% five non-call three deal nearly twice subscribed by over 120 accounts, establishing STATS ChipPAC in the capital markets under its new ownership.
SOUTH KOREA
Kookmin Bank $500m covered bond due 2020
Joint bookrunners: BNP Paribas, Citi and Société Générale
It had been a long time in the making but Kookmin Bank’s $500m five-year covered bond from October was a genuine watershed for the country. The bond was the first under the Covered Bond Act as well as the first triple-A rated covered bond from the country.
It was in June 2015 that the A1/A/A rated Korean lender first started sounding out investors for a possible trade and set up an $8bn global covered bond programme. But as volatility spiked during the summer, joint bookrunners BNP Paribas, Citi and Société Générale advised the issuer to wait a while longer.
The delay proved fortuitous as in the interim Fitch raised South Korea’s rating from A+ to AA-. That meant the country had double-A ratings from the three main agencies, leaving the way open for Kookmin’s covered bond to get the top rating.
When books finally opened the borrower received around $800m of demand including investors who were buying into Korea for the first time.
TAIWAN
United Microelectronic Corporation $600m convertible bond due 2020
Joint bookrunners: Credit Suisse, HSBC and Morgan Stanley
Some deals impress with their size and others the technical and structural challenges they have to overcome. United Microelectronics Corp (UMC) convertible bond impressed on both fronts.
Asia’s CB market was far from booming in 2015 but that did not stop UMC venturing out with a deal that would really test investor appetite for its product and its name.
The deal was launched as a zero coupon, negative yield transaction which might have been challenging enough but as the transaction was to be settled in US dollars and UMC shares are dominated in Taiwanese dollars, the leads had to use a currency linked structure setting an exchange rate of NT$30.708 to the US dollar.
But UMC’s strong credentials, the lack of issuance in the market and the positive backdrop when the deal launched meant that UMC got enough demand to raise $600m with a yield of minus 0.25%.
When it priced, the trade was the largest Reg S CB that year, the first negative yield CB in the region from a non-sovereign issuer since 2006 and the first currency linked structure since UMC’s previous deal from 2011.
THAILAND Mizuho Bank Bt3bn ($84m) bond due 2018
Sole bookrunner: Siam Commercial Bank
Mizuho Bank scored a number of firsts with its Bt3bn 2.33% three year bond from September.
Top of the list is the deal’s positon as the first trade under the Asean+3 Multi-Currency Bond Issuance Framework (AMBIF). Set up in March 2015, AMBIF is part of efforts to create a single capital market in southeast Asia. Under AMBIF an issuer can use one document to sell a bond in all jurisdictions that have implemented the framework.
As a result, Mizuho’s bond was a real test case for the new scheme. Sole bookrunner Siam Commercial Bank worked extensively with Securities and Exchange Commission Thailand (Thai SEC), the Stock Exchange of Thailand (Thai SET) and Bank of Thailand (BoT) as well as investors to get all the parties comfortable with the transaction.
The bond was also the first gauge of investor demand, both for the framework and for Mizuho, as it was the bank’s first bond in Thai baht. But thanks to its AAA rating by Fitch Ratings Thailand and the credit diversification it offered investors, the bond was 1.5x subscribed.
Not that the deal went off without a hitch. Bookbuilding was postponed by five days as Mizuho waited for one of its main asset manager investors to get approval to buy the notes. But once the trade got underway it was plain sailing.
The trade is also the first Thai baht transaction to be listed on the Tokyo Pro-Bond market.
VIETNAM
Home Credit Vietnam Finance Company $50m senior secured loan due 2018
Mandated lead arrangers and bookrunners: Credit Suisse, Maybank, Vietnam Joint Stock Commercial Bank for Industry and Trade
The small size of the loan for Home Credit Vietnam belies its significance as a trendsetter in the consumer finance sector in the region.
Sourcing foreign liquidity for a non-recourse facility in a country that has as trying a regulatory set-up as Vietnam was not going to be an easy task. Moreover, the borrower, being a consumer finance company, could not offer banks any tangible assets as security.
This meant using a different approach, so lead Credit Suisse came up with the novel idea of giving banks access to receivables underpinned by the borrower’s loan portfolio. It also anchored the deal by taking $35m at the outset.
Not only did the financing ease the burden of debt on parent Home Credit Group, its success prompted the Czech Republic-based company to ask Credit Suisse to mimic the structure for borrowings of other subsidiaries across Asia Pacific too.
The loan has also unleashed an important source of liquidity for consumer finance companies in Vietnam, which find it hard to get credit from local lenders.