UBS

China Evergrande Group attempted the largest Asian convertible bond in nearly two decades this week. But after investors baulked, the company pulled off one of the starkest changes of direction to a live deal GlobalCapital Asia has ever seen, relaunching with a new structure, a smaller deal size and a bigger bookrunning group, writes Jonathan Breen.

China Evergrande Group made its debut in the equity-linked market on Tuesday, raising a hefty HK$18bn ($2.3bn) from a convertible bond — but not before slicing a third off the original deal size and rejigging its structure.

Equity investors have entered the New Year hungry for assets. Demand on deals has well exceeded initial volumes, leading to issuers increasing sale sizes.

Property developer China Evergrande Group opened books for a HK$23bn ($2.9bn) perpetual convertible bond on Tuesday evening, a deal that was much sought after by banks.

Future Land Development Holdings and Powerlong Real Estate Holdings sold their respective equity-linked notes with almost similar results on Monday. Both deals were fully increased and priced near the investor-friendly end of terms.

Recent heavy supply in the Asian dollar bond market has found its first victim in Yango Group Co, which called off a planned $250m deal on Monday. While the Chinese developer’s high leverage raised some concerns, volatility in US Treasuries also played its part in the underwhelming demand.

Alstria, the German REIT, sold 15.3m new shares through an accelerated bookbuild, after the close of trading on Monday night, to finance the acquisition of two new properties in Hamburg and Stuttgart and the settlement of a convertible bond.

Two Chinese property developers are in the market on Monday evening to sell convertible bonds with nearly identical structures.

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The ski slope trajectory of additional tier one (AT1) coupon levels continued this week with UBS and Belfius locking in ultra-tight prices. And with investors keen on the credit fundamentals of banks and the relative value the AT1 product offers, the dynamics behind the rally still have steam.

Corporate bond investors were offered 10 year and 11.5 year new issues on Wednesday and combined order books of over €4.4bn showed there is significant demand for longer tenors in this market.

Russia’s Alfa-Bank achieved a sub 7% print to raise $500m with the first additional tier one from the country this year.