IFRASIA

INTERNATIONAL FINANCING REVIEW ASIA

FEBRUARY 10 2018 ISSUE 1028 www.ifrasia.com

Asian issuers pay to play as volatility

blows hole in dollar bond pipeline

Qingdao Haier among first to study

novel D-share listing in Frankfurt

Panda bond rulebook nears publication

over two years after market reopens

BONDS EQUITIES STRUCTURED FINANCE PEOPLE & MARKETS

Widjaja-backed Vietnam stock NAB prints Asia Hong Kong loosens
miner offers highest market gets a Pacific’s first IPO rules to allow
yield of 2018 to sell boost from Green mortgage pricing below
dollar bond debut privatisation plans securitisation marketed range
07 08 09 12
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Upfront
D-share dreams
P
lans to launch a new class of Chinese shares in
Germany are gaining traction, but it would be a
mistake to assume that Frankfurt will one day rival
SHAREûLISTINGûISû
Hong Kong or the US as a gateway for Chinese equities.
Qingdao Haier, which claims to be the world’s biggest
white-goods manufacturer, is considering a listing of
D-shares on the China Europe International Exchange in
Frankfurt.
CEINEX is a joint venture between German and Chinese
exchanges, and its D-share concept has already won the
blessing of regulators in both countries. Convincing issuers
and investors, however, will be another matter.
At a high level, access to a rich European investor
base looks attractive for a Chinese company with global
ambitions, such as Haier. But it’s hard to imagine the
nascent D-share market competing with more established
A better option would be a
trading link along the lines
of Hong Kong’s tie-ups with
Shanghai and Shenzhen.
As and Hs on valuation or liquidity.
CEINEX was conceived as an offshore renminbi
marketplace that would allow European investors to gain
OPINION INTERNATIONAL FINANCING REVIEW ASIA
without creating a new group of instruments that will
inevitably lack the liquidity of their home market.
Haier may well decide to press ahead with a European
listing, especially if it has its eye on future acquisitions in
THEûREGIONû"UTûIFûTHEûMAINûBENElTûOFûAû$
marketing, rather than fundraising, initial deals are likely
to be far smaller than the exchange would like.
Jumping for junk
I
n a rollercoaster week for global markets, the latest
batch of Asian high-yield bonds deserves close attention.
4UMBLINGûSTOCKûMARKETSûANDûAûmIGHTûTOûTHEûSAFETYûOFû
US Treasuries are usually disastrous for sub-investment
GRADEûlNANCINGSû"UTûMOSTûOFû!SIASûNEWûISSUESûOVERûTHEûPASTû
week have come from low-rated borrowers, with only one
high-grade issuer clearing the market.
Does this mean Asian investors are still looking to add
risk, regardless of the turmoil in global markets? Or are
these companies simply desperate to raise cash no matter
what price?
Both arguments make sense. Investors see junk bonds as
offering a bigger cushion against rising US Treasury yields,
and they certainly got some juicy coupons, with Sunshine
ûPAYINGûûANDû)NDONESIANûMINERû'OLDENû%NERGYûANDû
2ESOURCESûYIELDINGû
Most issuers, meanwhile, preferred to wait for calmer
times before launching their deals.
Many Chinese issuers have offshore debt quotas due to
expire next month, suggesting a sense of urgency behind
exposure to the Chinese currency through their existing MOSTûOFûTHEûWEEKSûlNANCINGSû3IMILARLYû3OUTHû+OREASû
trading accounts, and its most popular products are ETFs Daegu Bank, the only high-grade issuer to sell US dollar
tracking Chinese equity markets. Trading data isn’t easy bonds during the week, paid a premium to access the
TOûlNDûBUTûBYû!PRILûûFOURûMONTHSûAFTERûITSûLAUNCHû
AVERAGEûDAILYûTRADINGûVOLUMEûWASûAROUNDûüM
Some PRC issuers are coming on board: China
Development Bank listed Green bonds on the exchange
in November. But a big listing from a blue-chip stock like
Haier would be a monumental leap.
YIELDûINûûMAYûBEûDASHED
European investors do have other ways of taking a view
on Chinese equities, and Haier’s Shanghai shares are
already available to international investors through the
market ahead of an April maturity.
Last week’s volatility presented a better entry point
for brave investors – especially those who were already
prepared to anchor deals before the sell-off. But if the
US market stays shaky, hopes for a repeat of the stellar
PERFORMANCEûOFû!SIANûHIGH
Still, the latest batch of high-yield offerings underlines
just how far the Asian market has come in the last couple
of years. Not long ago, high-yield issuers would be the last
Hong Kong-Shanghai Connect trading link. TOûJOINûTHEûPARTYûINûAûBULLûMARKETûANDûTHEûlRSTûTOûDISAPPEARû
A better option would be a trading link along the lines when things turned bearish. The pool of wealth now
of Hong Kong’s tie-ups with Shanghai and Shenzhen. A available in China and beyond means that is simply no
Frankfurt Connect would meet the same objectives, but longer the case.

International Financing Review Asia February 10 2018 1

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2 International Financing Review Asia February 10 2018

Contents
INTERNATIONAL FINANCING REVIEW ASIA
BONDS
04 Volatility sidelines Asian issuers COUNTRY REPORT
Global volatility meant only a handful of Asian issuers
dared to brave the offshore bond market last week, and 17 AUSTRALIA
those that did had to pay up. Westpac has released price
guidance at 90-day BBSW plus
320bp–340bp for Westpac
BONDS
Capital 5 Notes, aiming to raise
04 Haier mulls landmark listing approximately A$750m
Chinese home-appliance giant Qingdao Haier is
18 CAMBODIA
considering a listing in Frankfurt that would create a
Acleda Bank’s five-year
new class of stock for PRC companies. offshore loan, doubled in size
to US$100m, was allocated
BONDS to 11 banks with Shin Kong
06 Panda rulebook on the horizon Commercial as sole MLAB
China has taken a big step towards the publication of 19 CHINA
long-awaited guidance on Panda bond offerings, more Greenland Holding, rated Ba1/
than two years after reopening the market. BB/BB, drew final orders of
US$1.9bn for a US$700m dual-
tranche offering of US dollar
senior unsecured notes
NEWS
25 HONG KONG
07 GEAR pays year’s highest yield ZH International Holdings
GEAR overcame choppy markets to make its offshore plans to raise US$200m from
debut last Thursday, but the company had to pay the the sale of US dollar short-
highest year-to-date yield in the Asian G3 sector. term notes to meet general
corporate needs
07 Volatile Sing rates stall issuance Sales of Singapore dollar bonds
ground to a halt this month on large swings in local benchmark rates. 25 INDIA
08 Vietnam steps up privatisations Vietnam’s equity capital market is Golden Energy on Thursday
overcame choppy markets on its
enjoying flurry of activity since the beginning of the year.
offshore debut, but had to pay
08 Ezion nears rehabilitation Ezion Holdings has secured the support of its
the highest yield in the Asian G3
secured lenders for a restructuring that will slash its debt burden. sector year to date
26 INDONESIA
PEOPLE & MARKETS Panin Bank intends to issue
Rp3.9trn five-year rupiah bonds
12 Hong Kong loosens IPO pricing rules at 7.6% with the help of five
Bankers in Hong Kong have welcomed the local lead arrangers, according to a
bourse’s plan to allow issuers to sell IPO shares below source close to the plans
indicative price ranges. 28 JAPAN
12 Singapore, Malaysia to renew trading link The two countries plan to Toei Reefer Line’s management
buyout is back in the limelight
establish a new trading link between their stock markets.
after a revised bid from its
15 Who’s moving where Deutsche Bank has appointed Duncan Mann and
president, who failed in an
Apurva Shah as co-heads of financial sponsors for Asia Pacific. attempt last month
16 In brief Singapore’s central bank is studying the risks cryptocurrencies
pose, yet so far there is no strong case to ban trading of the digital coins. 29 MALAYSIA
Comment Jonathan Rogers is away State-owned DanaInfra
Nasional sold M$4bn of Islamic
bonds in a multi-tranche
ASIA DATA transaction last week through
five joint lead managers
34 This week’s figures
International Financing Review Asia February 10 2018
FEBRUARY 10 2018 ISSUE 1028
30 NEW ZEALAND
Fletcher Building is reviewing
key projects of its building and
interiors division as it expects to
post losses on breaches of one
or more of its loan covenants
30 PHILIPPINES
Food and beverage company
Del Monte Pacific plans to list
unit Del Monte Philippines on
the Philippine Stock Exchange
with an IPO of up to Ps16.7bn
30 SINGAPORE
GuocoLand raised S$50m from
a tap of its 4.6% perpetual non-
call five bonds, priced at par
with a spread of 260.9bp over
Singapore dollar SOR
31 SOUTH KOREA
Daegu Bank, rated A2/A–
(Moody’s/S&P), drew final
orders of US$2.3bn from 138
accounts for US$300m of US
dollar senior unsecured bonds
32 TAIWAN
The Taiwan Formosa bond
market continued to provide
ample fundraising opportunities
for Asian issuers in the first five
weeks of the year
33 THAILAND
Frasers Property Holdings
Thailand will sell bonds of up
to Bt5bn at end-February on its
market return after a Bt2.5bn
maiden issue late last year
33 VIETNAM
A US$100m term loan
for Vietnam Joint Stock
Commercial Bank for Industry
and Trade has seen six lenders
join in general syndication
3
NewsPanda rulebook 06 Singapore stalls 07 Vietnamese privatisations 08

Volatility sidelines Asian issuers

„ Bonds Handful of borrowers brave market, but investors demand high premium

BY CAROL CHAN, DANIEL STANTON deal helped draw demand of secondary trading on Thursday. deals that came to market the
more than US$2.3bn, but final Final pricing was also around same day. Daegu Bank has
Global volatility meant only a pricing of Treasuries plus 135bp 20bp inside initial guidance, a US$300m bond maturing
handful of Asian issuers dared was estimated at 10bp–15bp fairly modest for an Asian on April 29, giving it little
brave the offshore bond market wide of fair value, and the dollar transaction, but in line flexibility on timing.
last week, and those who did bonds tightened 17bp in with US investment-grade On Thursday, Indonesia’s
had to pay up.
Ten-year US Treasury yields
jumped 5bp on February 2 on
better-than-expected non-farm
payrolls and wage growth, then
tighened 13bp last Monday
before widening 10bp on
Tuesday. The iTraxx Asia ex-
Japan investment-grade CDS
index widened 4bp on Monday
and by the same amount on
Tuesday, as risk appetite fell.
The REPUBLIC OF INDONESIA was
forced to delay a planned US
dollar offering, and the only
Asian investment-grade issuer
to complete a trade last week
was South Korea’s DAEGU BANK
with a US$300m 5.5-year issue.
“We are still having calls on
other deals, and other issuers
are standing down,” said a DCM
banker.
The relatively short tenor and
capped size of Daegu Bank’s

Haier mulls Frankfurt listing Exchange and Deutsche Boerse

„ Equities Home-appliance maker among first to study new D-share format
BY FIONA LAU, JULIE ZHU
Chinese home-appliance giant
QINGDAO HAIER is considering a
listing in Frankfurt that would
create a new class of stock for
PRC companies.
Haier said in a filing last
Friday that it was studying the
feasibility of issuing D-shares
in Germany, adding that it
had not yet decided on the
potential issuance or hired any
advisers.
Reuters and IFR first reported
the plans last Thursday, citing
people familiar with the move.
Shanghai-listed Haier is one
of a few Chinese companies
studying the D-share format,
a joint initiative of stock
exchanges in Shanghai and
Germany.
The size of the share sale,
which could take place as
early as this year, has not been
decided as the discussions are
still at an early stage, according
to sources.
“The stock exchange would
want the company to do a
landmark transaction with a
sizable offering, say around
US$1bn, while the company
may not want to sell a big
chunk of shares at a discount,”
said one of the sources.
As of last Thursday, Haier’s
market capitalisation stood
at Rmb117bn (US$18.7bn),
with the stock trading at a
forecast 2018 P/E of about
14.5. Generally, investors look
for a discount when a listed
company sells shares in a
follow-on offering.
D-shares, similar to Hong
Kong-listed H-shares, are a new
product being touted by the
China Europe International
Exchange (CEINEX), a joint-
venture trading platform that
the Shanghai Stock Exchange,
China Financial Futures
created in November 2015.
CEINEX markets itself as
a gateway for Chinese firms
looking to access European
investors, offering renminbi-
denominated products
including stocks, bonds and
exchange-traded funds on the
Frankfurt Stock Exchange’s
existing infrastructure and
under German regulations.
CHINA SHOWCASE
The Shanghai Stock Exchange
and Frankfurt Stock Exchange
are looking for a well-known
Chinese company to launch
the D-share format through
a sizable deal to showcase
the German city’s appeal as
a listing venue for Chinese
companies, according to one of

4 International Financing Review Asia February 10 2018


Green RMBS premiere 09
GOLDEN ENERGY AND RESOURCES
managed to print a US$150m
five-year non-call three issue,
but had to pay 9.375%, the
highest yield in the Asian G3
market so far this year.
The volatility forced some
Chinese issuers to push back
their offshore issuance plans
in the hope that more benign
conditions will prevail after the
Lunar New Year holiday.
“We’ve kept monitoring the
markets but didn’t see a very
good window to launch the
deals,” said a syndicate banker
from a Chinese bank. “Investors
are very cautious, especially
as some of our deals are those
private, unlisted high-yield
names, which find it hard to
draw investors’ interest in a
risk-off environment.”
Still, a few Chinese issuers
printed US dollar bonds last
week, including property
developers SUNSHINE 100 CHINA
HOLDINGS and FANTASIA HOLDINGS
GROUP, and Chinese local
government financing vehicles
FUJIAN ZHANGLONG GROUP and
SHANGRAO INVESTMENT HOLDING
GROUP. Most of these deals were
said to be heavily anchored,
giving them confidence that
they could make it through a
the people.
The first three D-share
listings are expected to raise
between €500m (US$614m) and
€1bn for a total of up to €3bn,
Reuters reported.
So far, Frankfurt has
struggled to attract listings
from major Chinese companies,
which generally prefer to float
in the domestic A-share market
for higher valuations, or in
Hong Kong or the US, where
investors are more familiar
with such issuers.
A series of scandals involving
small-cap Chinese companies
listed in Frankfurt has also
dented investor interest in PRC
entities.
In 2014, the chairman of
Ultrasonic, a small Chinese
shoemaker listed on the
First reset on PRC perps 10
shaky market.
On the other hand, nothing
was heard from Guorui
Properties, Jiangyin Chengxing
Industrial Group, Guangzhou
City Construction Investment
Group, Shandong Hi-Speed
Group, Inner Mongolia BaoTou
Steel Union, HC International,
Hubei Science & Technology
Investment Group and Taizhou
Huaxin Pharmaceutical
Investment, all of whom
originally aimed to issue bonds
late last month or earlier this
month, but now will have to
wait until late February to get
RISK OFF
CREDIT SPREADS IN ASIA HAVE REVERSED COURSE THIS MONTH
90
85
80
75
70
65
60
55
Jul 17 Aug 17 Sep 17 Oct 17
iTraxx Asia ex-Japan IG index (bp)
Source: Markit via Thomson Reuters Eikon
Frankfurt Stock Exchange,
disappeared, together with
his son, with US$60m from
the company’s bank account.
“The stock exchange would want the company to
do a landmark transaction with a sizable offering,
say around US$1bn, while the company may not
want to sell a big chunk of shares at a discount.”
In the same year, the CEO of
Frankfurt-listed Youbisheng
Green Paper also disappeared.
Haier’s move to sell
shares overseas fits with the
International Financing Review Asia February 10 2018
Indian insurers raise sub debt 11
going, according to market
sources.
CLOCK TICKING
Chinese issuers are unlikely
to launch deals this week,
considering that settlement
usually takes four or five
working days. Lunar New Year
falls on February 16 and China
has a week-long holiday from
February 15.
Bankers said deal flow from
China was likely to resume in
the week of February 26.
However, as many issuers have
offshore debt issuance quotas
Nov 17 Dec 17 Jan 18 Feb 18
company’s strategy to raise
its international profile as a
leading Chinese manufacturer,
especially as Germany is
renowned for its expertise
in white goods, according to
another source.
Haier bought General
Electric’s white-goods business
For daily news stories
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from the National Development
and Reform Commission that
will expire by the end of March,
that will not leave much time for
them to complete their planned
bond sales.
Indeed, many Chinese issuers
wanted to complete their
deals before Lunar New Year,
according to bankers.
“Nobody know whether the
market will be better or even
worse after the holidays,” one
of the bankers said. “They want
to use up their offshore debt
quotas before they expire, as
there is no assurance whether
they can secure an extension
from NDRC or whether they
will get into trouble when
applying for new quotas.”
However, another banker
dismissed some of the worries.
He said there are examples of
other issuers getting NDRC
extensions.
“I think NDRC will be
reasonable in this regard as
it also knows the market
situation,” the banker said.
He said he had seen a list
of more than 10 companies
to which NDRC had granted
offshore debt issuance quota
extensions from end-December
last year to end-June this year.
in 2016 and claims to be the
world’s biggest maker of large
home appliances.
According to the company’s
2016 annual report, citing
research from Euromonitor,
Haier controlled 10.3% of the
global market for large home
appliances, ranking No 1 for
the eighth consecutive year.
Shanghai Stock Exchange
said last year that CEINEX
would initially welcome
D-share offerings from China’s
blue-chip listed companies,
especially manufacturers
looking to expand overseas.
Issuing D-shares could help
Chinese companies increase
the awareness of their brands
in Europe, and promote their
business in the European
market, according to SSE. „
5
News
Panda rulebook on the horizon
„ Bonds Long-awaited guidance looms after initial approval from regulators

BY INA ZHOU
China has taken a big step
towards the publication of long-
awaited guidance on Panda
bond offerings, more than
two years after reopening the
market in September 2015.
The main regulator for
corporate bonds in the
interbank market said last
week a committee had granted
initial approval to a new rule
on non-financial Panda bonds,
raising hopes that the rulebook
is finally on the horizon.
The National Association of
Financial Market Institutional
Investors, which operates
under the People’s Bank of
China, said in a statement on
its website that its Bond Market
Professional Committee had
passed guidance on overseas
non-financial corporate debt
instruments, without giving
details.
Market participants said that
meant rules on Panda bonds
were imminent, as they now
only require a second approval
from another committee
at NAFMII and registration
with the PBoC before being
published. NAFMII oversees
corporate and sovereign Panda
bonds in China’s vast interbank
market.
Bankers have been waiting
for explicit guidance for the
Panda bond market for the
past two years. That did not
stop deals from coming to
market, but meant most issues
had to be reviewed on a case-
by-case basis, with little clarity
over the odds of regulatory
approval.
“We are very much looking
forward to the new rules after
going through ambiguity in
the past. We do hope it will
give us clear guidance”, said a
Beijing-based DCM banker with
a Chinese bank.
Bankers who have seen
NAFMII’s new rules said they
deal mainly with technical
issues such as the types of
documentation required
and the registration process,
and are roughly in line with
existing practice in the Panda
bond market.
NAFMII has not directly
addressed sensitive issues like
accounting systems and the use
of proceeds, but asked issuers
to meet certain requirements
set by Chinese regulators,
including the PBoC, these
bankers said.
The main sticking point
for regulators has been the
complexity of reconciling
foreign accounting and auditing
standards with their Chinese
equivalents.
Those issues are expected to
be addressed in new guidelines
from the PBoC, which could
come out before the release of
NAFMII’s rules, bankers said.
“This time, Panda bond rules,
from both NAFMII and PBoC,
look set for publication,” said
a Shanghai-based DCM banker.
He expected both sets of rules
to be announced after the
Lunar New Year, with the PBoC
likely to publish first.
According to sources, the
PBoC’s guidance is expected
to stipulate that financial
and corporate issuers using
accounting standards that
are not recognised by China’s
Ministry of Finance, such as
US GAAP, will need to provide
quantitative reconciliation or
qualitative restatement of their
financial reports for any public
offering of Panda bonds.
These issuers will also have
the option of adopting the
private placement format,
which does not require
reconciliation or restatement of
financial reports, sources said.
MORE DIVERSE ISSUERS
Bankers said the new rules
would potentially open Panda
bonds to a more diverse range
of issuers, but did not foresee
a jump in supply, given rising
onshore yields, additional costs
for some issuers and some
disclosure requirements with
which non-Chinese issuers
might not be comfortable –
for instance, updating their
financial statements quarterly
in China.
As the MoF only recognises
European and Hong Kong
accounting standards, issuers
using other norms will face
additional costs to adjust
their financial statements
for a public offering. Private
placements usually required
a higher liquidity premium,
bankers said.
Sovereigns, supranationals
and agencies are not subject
to the rules on accounting
treatment for public offerings,
sources said.
In the past three years, some
foreign names have tested
the Panda bond market, but
offshore-incorporated Chinese
issuers have been the main
issuers. Bankers do not expect
that dynamic to change soon.
Excluding sovereigns, only
two issuers have launched
public offerings of Panda bonds
without Hong Kong accounting
standards. To win approval,
National Bank of Canada
and Maybank had to provide
qualitative explanations of
accounting differences.
In the private placement
segment, Daimler, French
water-management company
Veolia Environnement, Russian
aluminium producer Rusal, and
Japanese lenders Bank of Tokyo-
Mitsubishi UFJ and Mizuho
Bank are the only issuers
not following Hong Kong
accounting standards.
According to United Credit
Ratings, issues of Panda bonds
in the interbank and exchange-
trade markets fell 40% in 2017
to Rmb71.7bn (US$11.3bn) „

6 International Financing Review Asia February 10 2018


GEAR pays year’s highest yield
„ Bonds Indonesian coal miner offers Asia’s richest returns of 2018 for US dollar debut
BY DANIEL STANTON
GOLDEN ENERGY AND RESOURCES
overcame choppy markets to
make its offshore debut last
Thursday, but the Indonesian
thermal coal producer had to
pay the highest yield in the
Asian G3 sector year to date.
It priced US$150m of five-
year non-call three senior
bonds at 98.53 with a coupon
of 9% to yield 9.375%. This was
tightened from initial price
guidance of 9.5% area.
That exceeded 9% yields seen
from Ronshine China Holdings
and China Logistics Property
Holdings, although the latter’s
issue was for a tenor of just 362
days.
Volatile Sing rates stall issuance
„ Bonds Emirates NBD’s launch of Singapore dollar note awaits calmer rates backdrop
BY KIT YIN BOEY
Sales of Singapore dollar
bonds ground to a halt this
month as large swings in local
benchmark rates forced issuers
and investors to rethink pricing
expectations.
Bankers had hoped the
strong momentum in January
issuance would continue into
February. A dozen bonds of a
combined S$2.2bn (US$1.7bn)
were sold last month, up
sharply from just three prints
of S$920m in January last year,
according to OCBC Bank’s
credit research data.
One debt originations head
said the recent moves in the
SOR levels were not favourable
and sentiment in the market
was quite tricky with the
uncertainties.
“There are a few deals in
the pipeline. Typically, we get
issuers with needs for planned
capital expenditure or asset
acquisitions funded in the first
two months of the year,” he
The size was short of
the US$300m Moody’s had
estimated in its rating note on
January 19, but would help the
issuer establish a track record
with bond investors and build
access to capital markets.
The notes are expected to
be rated B1/B+ (Moody’s/Fitch),
in line with Singapore-listed
GEAR’s issuer rating.
Price references were Geo
Energy Resources’ 2022 bonds,
rated B2/B/B+ and quoted at
8%, and Indika Energy’s curve.
Indika, rated Ba3/B+ (Moody’s/
Fitch), had 2022s at 5.78% and
6.12%. GEAR was expected
to pay a premium over those
names due to the market
conditions, its debut status, and
said. “With the choppiness in
the market, issuers are now
just monitoring the volatile
markets and waiting for the
right windows.”
EMIRATES NBD BANK held
meetings with fixed-income
investors on February 1 for
a potential senior Singapore
dollar bond. DBS Bank, Emirates
NBD Capital, HSBC and Standard
Chartered are joint lead
managers and bookrunners.
Since the roadshow,
Singapore dollar SOR rates had
oscillated wildly, but mostly
upwards, in tandem with US
Treasury yields. Sharp moves
came on January 29, when
short tenors in the SOR curve
climbed 5bp–8bp and long
tenors went up 8bp–10bp. On
January 31, rates fell 2bp–6bp
across the curve before rising a
total of 6bp–12bp over the next
two days.
Last Monday, the 10-year US
Treasury yield touched 2.89% –
the highest since January 2014
before a flight to quality amid
International Financing Review Asia February 10 2018
the controversial history of its
sponsor.
The Widjaja family’s
Sinarmas Group owns a 91%
stake in Dian Swastatika
Sentosa, which holds a 87%
stake in GEAR. The Sinarmas
sponsorship deterred some
investors, who still remember
bondholders of the group’s
flagship Asia Pulp and Paper
being practically wiped out
after a default in 2001.
“We cannot recommend any
bonds issued by Widjaja-related
companies due to the family’s
track record of low willingness
to pay,” wrote Lucror Analytics.
However, other companies
related to the family have
managed to access the offshore
a global sell-off in risk assets
sent it tumbling to 2.72%. The
following day, the Singapore
dollar SOR rates fell at a less
frenetic pace of 2bp-6bp
across the curve, reflecting a
decoupling from the Treasury
moves.
“The SOR rates are
outperforming the US rates,
mainly because the Singapore
dollar is benchmarked against
a basket of currencies and that
has provided a buffer to the
impact from the US rates,” said
one banker.
PRICE EXPECTATIONS
“The volatility is due mainly to
uncertainties over how many
rate hikes there will be in the
US, but the healthy economic
fundamentals in Singapore
remain unchanged and there is
still a lot of liquidity here. So,
there is a bit of over-selling.”
One consequence of the
swings is a widening in price
expectations between issuers
and investors. Over the medium
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visit www.ifrasia.com
market in recent years, notably
APP-China Group and Bumi
Serpong Damai, and there
was clearly sufficient investor
demand to complete the deal.
Final book statistics were
not disclosed, but, when final
guidance was announced,
orders were said to be over
US$250m. The volatile market
conditions and divisive nature
of the credit meant that orders
reflected true demand and were
not inflated.
The bonds were trading
around reoffer on Friday
morning, though most
investors had taken a buy-and-
hold approach.
Credit Suisse and CLSA were
joint bookrunners.
In November, GEAR
announced it would buy a stake
of around 10% in Australian
gold miner Westgold Resources
for A$67.86m (US$52.7m). „
term, investors are likely to
demand higher new-issue
premiums ahead of imminent
US rate rises this year. This will
mean a longer price-discovery
process, especially for newer
credits like Emirates NBD.
“Smoothening out the
volatilities, SOR rates are likely
to drift higher as the US Fed
hikes rates,” said Eugene Leow,
rates strategist at DBS for G3
and Asia markets. “Broadly
speaking, Sing dollar rates
are still low as the market
is factoring in US dollar
weakness.”
Bankers say Emirates NBD is
willing to wait for a favourable
window as it is not in urgent
need of funds. Its foray into
Singapore dollars is to diversify
its funding avenues and
currencies, as it did in Australia
where it pushed through a
A$450m (US$364m) 10-year
Kangaroo bond on February 1.
Emirates NBD Bank was
formed in 2007 from a merger
of Emirates Bank and the
National Bank of Dubai. Its
predecessor, Emirates Bank,
had raised a total of S$190m in
three separate Singapore dollar
issues in 2006. „
7
News
Vietnam steps up privatisations
„ Equities Deals draw mixed response over pricing and due diligence concerns
BY S ANURADHA
Vietnam’s equity capital market
is enjoying a flurry of activity
since the beginning of the year
as the government steps up the
pace of privatisations to cut its
fiscal deficit.
Five state-owned companies,
VIETNAM RUBBER, PETROVIETNAM
POWER, PETROVIETNAM OIL, BINH SO
REFINERY and POWER GENERATION CORP
3 (Genco 3) raised a combined
D18.1trn (U$797m) from IPOs so
far this year.
This year’s IPOs are much
larger than the sub-US$100m
floats of the past. The increased
sizes reflect the government’s
efforts to slash its fiscal deficit,
which has exceeded 6% of GDP
between 2012 and 2016 and is
due to fall to under 3.5% of GDP
by 2020.
The government said
last Monday it had set up a
committee to oversee around
D5,000trn of state-owned
Ezion nears rehabilitation
„ Restructuring Secured lenders support US$1.5bn refinancing as creditors get equity
BY KIT YIN BOEY
Cash-strapped Singaporean oil-
rig and support-boat company
EZION HOLDINGS has received the
support of its secured lenders
for a restructuring that will
slash its debt burden and reduce
interest costs.
DBS Bank, OCBC Bank,
United Overseas Bank, Malayan
Banking, CIMB Bank and
Caterpillar Financial signed
a binding agreement on a
US$1.5bn refinancing, which
will include minimal fixed
principal repayments over six
years and lower interest rates.
The lenders have also agreed
to provide revolving credit
facilities of another US$118m.
In return, the secured lenders
will receive new shares and
warrants. As a sweetener,
8 International Financing Review Asia February 10 2018
corporate assets as part of an
initiative to boost privatisation.
The new Committee for
State Capital Management at
Enterprises would be more
comprehensive than the State
Capital Investment Corporation,
Vietnam’s main state investment
arm, officials said. This is
designed to simplify the sale
of equity stakes in state-owned
companies, which have suffered
delays and complications
because many fall under the
management of multiple
ministries.
A vibrant stock market
is providing a favourable
environment for privatisations.
The benchmark Vietnam Index
rose close to 50% in 2017 and is
up 5.7% year to date.
Regulators have also improved
listing procedures to woo
investors. The shares sold in the
recent IPOs will be listed within
90 days as opposed to years in
the past.
major shareholder and Ezion
CEO Chew Thiam Keng and
his family have offered 100m
of their personal shares to be
pledged in favour of the secured
lenders.
The agreement with lenders
comes a few days after the
company made an early
redemption of a S$120m
(US$90m) 3.65% DBS Bank-
backed bond. Major bondholder
Ravi Murarka had demanded
that his investment in the bond
be redeemed, claiming that the
suspension of Ezion’s stock had
triggered a redemption clause,
and the repayment removed
the prospect of a potential court
battle.
Some elements still need
to be ironed out before Ezion
can exit the restructuring and
resume trading of its shares.
Investor interest in Vietnam
has grown steadily, especially
after VINCOM RETAIL’s record D16trn
IPO last year, which attracted
investors beyond the usual
line-up of frontier-market funds.
A group of employees raised
D4.68trn through the sale of
94.5m Vincom Retail shares last
Monday.
Despite the positive backdrop,
demand has been mixed due
to concerns over pricing and a
lack of due diligence. Bankers
say only share sales in privately
owned companies are likely to
attract broad-based demand this
year.
Many international investors
remain uncomfortable with
state-owned companies.
“Due diligence remains a
big issue. Investors are not
sure about the accuracy of the
numbers provided in the offer
documents,” said a Singapore-
based ECM banker.
Recent global market volatility
The company has yet to sign a
binding term-sheet to refinance
US$18m with three unsecured
lenders, which it said was being
finalised.
Ezion will also need to hold an
extraordinary general meeting
to obtain approval from existing
shareholders for the issuance of
new shares to creditors.
Assuming creditors convert all
debt into shares, the company’s
issued share capital, on a diluted
basis, would rise to 6.227bn
shares from 2.074bn shares.
In a detailed statement to
the Singapore Exchange on
Wednesday, Ezion outlined a
restructuring plan involving the
issuance of shares and warrants
to all creditors, including its
legal and financial advisers – a
reflection of the company’s
acute lack of cash resources.
has also raised doubts over
whether the recently privatised
state-owned companies will be
able to sell stakes to strategic
investors, as originally planned.
“There is no way these
companies can function properly
without the technological and
financial inputs of the strategic
partners,” the banker said.
Stakes of 28.88% in PV Power,
44.72% in PV Oil and 49% in
Binh So are due to be sold to
strategic investors. All three
are subsidiaries of state-owned
PetroVietnam.
The recent IPOs have had
mixed results as a result of these
concerns. The Vietnam Rubber
deal, which closed on February
2, raised only D1.311trn, less
than a quarter of the target due
to the overall lack of interest in
the sector. Similarly, investors
bid for just 2.8% of Genco 3’s
IPO on valuation concerns and
what they said was inadequate
marketing. The auction
Ezion had said in November
that its free cash flow in the
third quarter of 2017 was just
US$3.1m, with cash balances at
just U$47.2m.
Holders of six bonds of a
combined S$575m (US$433.3m)
agreed in November to waive
certain covenants, including any
event of default. The majority of
bondholders also voted on their
choices of restructuring options.
Close to 60% of holders of
series 003 to 007 senior bonds
chose to swap into 0.25% series
B convertible bonds due 2023,
while 16% chose series A 0.25%
non-CBs due 2024. Another
20.78% of holders of series
008 perpetuals voted to hold
amended notes which are also
convertible into shares.
Assuming bondholders
choose to convert all their notes
into shares, they stand to hold
about 35% of Ezion’s enlarged
share capital, while secured
lenders will have close to 4%
and others will take 5%, leaving

raised only D184.8bn for the
government, with only 0.36% of
the capital sold instead of the
12.8% on offer.
On the other hand, PV
Power’s D7trn and PV Oil’s
D4.1trn IPOs garnered strong
responses, despite being priced
at respective P/E multiples of 25
and 20. Regionally, oil marketing
companies trade at P/Es of 10–15
and power companies at 10–12.
“The power and oil
distribution companies were
marketed as consumer plays and
managed to sail through,” said
an ECM banker away from the
deals.
The Vincom Retail block
also did well, despite the global
market turmoil last Monday.
Around 94.5m shares were
sold at the bottom of D47,750–
D49,500 range, or a 6.9%
discount to the pre-deal spot.
Books were covered with
participation from sovereign
wealth funds, long-only
institutions and hedge funds.
Credit Suisse, Citigroup and
Deutsche Bank were the joint
bookrunners. Maybank was co-
manager. „
shareholders with the balance
of around 56%.
Ezion told local media that,
once the restructuring was
completed, its overall debt
would drop about 40%, based on
full conversion of debt to equity.
According to its statement to
the exchange, the warrants,
when exercised in full, could
raise new funds of up to
S$530.5m (US$400m).
Ezion also said all
stakeholders would not suffer
haircuts.
“This is a very smart plan
by the company to get all
debt converted into shares
and warrants,” said one credit
analyst. “It does not need to
come out with cash and, as the
creditors are nominally swapped
into shares, there are no
haircuts, which optically looks
good, but bondholders receive
far lower coupons of 0.25% in the
CBs, compared with the coupons
of 4.5% to 7% they received prior
to restructuring.” „
NAB prints first Green RMBS
„ Structured Finance Asia Pacific’s first Green RMBS prices in line with standard tranche
BY JOHN WEAVERS
NATIONAL AUSTRALIA BANK reopened
the domestic securitisation
market last Thursday with a
self-led A$2bn (US$1.56bn)
RMBS offering, which was also
the first from Asia Pacific to
include a green tranche.
The innovative trade, via
National RMBS 2018-1, is the
latest sign of growing demand
for environmentally responsible
investments in Australia and
adds another feather to the
cap of NAB, the market leader
in Australian Green bond
issuance.
The A$300m Class A1G
notes, expected to be certified
as climate bonds under the
Climate Bonds Initiative
standards, priced in line with
the standard A$1.54bn Class
A1As.
The A1G notes are backed
against a mortgage pool that
satisfies the CBI’s July 2017
low-carbon building guidance
for Australian residential
properties.
This covers energy-efficient
homes built after 2005 in three
states – New South Wales,
Victoria and Tasmania.
Bankers away from the trade
welcomed the development,
but some expressed concerns
about the structure’s rather
loose criteria.
“There is no correlation
between cash flows on the
green loans in the mortgage
pool and the repayment of the
Green bonds,” said one DCM
manager.
“As a result, if the mortgage
loans backing the Green bonds,
which rank pari passu with
the standard Class A1As, are all
paid off early and/or mortgage
borrowers switch to new
lenders, Green bondholders
could be left holding notes
with no Green loans in the
underlying mortgage pool.”
Follow IFR Asia @IFRAsia
International Financing Review Asia February 10 2018
In response, NAB told IFR
that the green mortgage pool
backing the A1Gs is A$474m, or
1.6 times the A$300m tranche,
“ensuring a conservative buffer
in the event of asymmetrical
Conditional Prepayment Rate
performance of the green and
non-green mortgages … to give
us comfort we will be able to
satisfy the use-of-proceeds test”.
The green tranche was 1.8
times oversubscribed and
predominantly sold to domestic
accounts. Real money took 82%
and bank balance sheets 18%,
with 81.2% allocated to so-called
dark green and light green
investors.
For the overall trade,
Australian investors bought
63% and offshore 37% with
real money and balance
sheet taking 56% and 44%,
respectively. There were 51
investors in the final book,
including 17 from overseas.
STANDARD PRICING
The only previous green asset-
backed securities issued in
Australia were much smaller
offerings originated by
consumer-finance specialist
FlexiGroup.
The A$50m A2G notes
within Flexi ABS Trust 2016-1
and A$50m Class A2Gs within
Flexi ABS Trust 2017-1 priced
5bp and 3bp tighter than the
standard tranches, respectively.
As a result, Flexigroup
managed to achieve the “holy
grail” of the green market,
convincing investors to accept
lower yields over conventional
notes.
Such “good-cause” premiums
could trigger a rush of Green
offerings from issuers that have
so far baulked at the higher
documentation costs involved.
The FlexiGroup result stood
out, however, both in national
and international terms.
All senior unsecured
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Australian dollar Green bonds,
like the NAB RMBS, have priced
in line with standard curves.
Furthermore, the only other
Green RMBS issuer globally,
Dutch mortgage lender Obvion,
paid slightly higher spreads
over standard RMBS for its two
trades in 2016 and 2017, both
targeted exclusively at green
investors.
MAJOR BANK COMPS
Both flavours of NAB’s A1
notes, with weighted-average
lives of 3.0 years, came at the
tight end of final guidance of
one-month BBSW plus 85bp–
88bp, refined from initial 88bp
area talk.
Pricing of the new NAB
A1 notes compares with the
90bp margin CBA paid for
the A1 notes at the previous
major bank RMBS issued on
November 17, the A$2.65bn
Medallion Trust Series 2017-2.
The Medallion A1s had a longer
WAL of 3.5 years.
The National RMBS 2018-1
A$70m Class A2s, A$46m Class
Bs, A$16m Class Cs, A$14m
Class Ds and A$8m Class Es,
all with 5.7-year WALs, priced
120bp, 170bp, 220bp, 320bp
and 445bp wide of one-month
BBSW, respectively.
Thanks to large
oversubscriptions, ranging
from 2.5 times for the Class
Es to 6.3 times for the Class
Cs, NAB was able to price the
notes 10bp–15bp inside both
initial guidance and the CBA
Medallion 2017-2 Class A2s, Bs,
Cs, Ds and Es.
These Medallion notes, all
with 6.2-year WALs, priced
135bp, 185bp, 235bp, 335bp
and 455bp over one-month
BBSW, respectively.
The National RMBS 2018-1
A$6m Class Fs priced 575bp
wide of one-month BBSW,
matching the CBA Medallion
Class F spread. „
9
News
Leasing firms flock to loans
„ Loans SMBC Aviation joins crowd as fast-growing Chinese borrowers dominate
BY PRAKASH CHAKRAVARTI
Aircraft-leasing company SMBC
AVIATION CAPITALhas launched a
debut US$600m syndicated loan,
adding to the list of financings
from the sector in recent months.
The leasing sector holds a lot
of appeal for lenders in Asia,
thanks to the growth stories and
parentage of the borrowers, and
the opportunities they offer in a
deal-starved environment.
Since September, more than 20
leasing companies have tapped
the Asian market for loans
of almost US$6bn, including
borrowings of US$2.83bn that are
in syndication.
Among them is Amsterdam-
headquartered AERCAP HOLDINGS,
which is returning to the Asian
loan market after nearly two
years for a US$600m four-year
revolving credit facility.
Parentage and strong credit
Step-up jolts Chinese perps
„ Bonds First coupon reset deals a blow to popular domestic debt structure
BY INA ZHOU
The first coupon reset on a
perpetual bond in China’s
domestic market last week
gave a wake-up call to investors
who had viewed the format
as nothing more than higher-
yielding bullet bonds.
CHINA JILIN FOREST INDUSTRY GROUP
took the unprecedented step
of paying a step-up coupon on
perpetual bonds, after eschewing
the first call date on February 4.
The company decided to forgo
the call option on its Rmb1bn
(US$159m) 7.10% perpetual non-
call three bonds and, instead,
raised the coupon to 10.55%, in
line with the original prospectus,
according to a filing to the
Shanghai Clearing House.
The incident added to worries
over the issuer’s ability to service
its debt, after it delayed at least
four other offerings of onshore
10
profiles are among the most
important factors drawing
lenders to leasing companies,
several of which are units of large
financial institutions.
Sumitomo Mitsui Financial
Group owns 66% of SMBC
Aviation Capital, which is rated
A–/BBB+ (Fitch/S&P). AerCap has
ratings of BBB- from both Fitch
and S&P.
Among borrowers with loans
in syndication are ABC FINANCIAL
LEASING and PING AN INTERNATIONAL
FINANCIAL LEASING. The former is
a unit of Agricultural Bank of
China, one of the Big Four banks
on the mainland, while PAIFL is a
unit of Ping An Insurance Group,
the world’s largest insurer.
Lending to leasing companies
means taking indirect exposure
to the parents, which do not have
a history of borrowing in the
syndicated loan markets.
“The leasing units present
perpetual bonds in the past two
weeks.
“The issuer was willing to
defer the payment of the notes
by paying as much 300bp. That
speaks a lot about the refinancing
difficulties of the company,”
said a senior credit analyst at
a Chinese securities house,
suggesting that it might have
defaulted on a three-year note
with a bullet maturity.
The perpetual notes were
issued in the interbank bond
market in February 2015 at a
7.10% coupon for the first three
years.
According to the bond
prospectus, if the notes were
not called at the end of the third
year, the coupon would reset for
the next three years to the initial
spread of 393bp over the three-
year Chinese Treasury yield, plus
300bp.
The notes were bid at a yield
International Financing Review Asia February 10 2018
a good opportunity for proxy
exposure to their parents at a
decent premium,” said a senior
loans banker in Singapore.
MADE IN CHINA
The majority of the leasing
company borrowers are from
China, where domestic liquidity
has been shrinking and the cost
of borrowing rising after recent
deleveraging measures in the
financial sector.
Although yields on three-
year Chinese Treasury bonds
had tightened to 3.61% last
Wednesday from 3.78% at
end-December, they were still
significantly higher than the
3.49% mark last July, according
to China Central Depository &
Clearing.
The domestic market for
Chinese leasing companies is not
entirely shut, but some of their
biggest loans have been offshore.
of 10.59% last Friday, according to
Thomson Reuters prices.
Last November, China
Chengxin downgraded Jilin
Forest to A+ from AA–, citing
concerns over its losses, rising
debt and refinancing pressure.
In the first three quarters
of 2017, the company, based
in northeastern Jilin province,
posted losses of Rmb473m.
The State-owned Assets
Supervision and Administration
Commission of Jilin province
held a 65% stake in the company
at the end of 2014, according to
the bond prospectus.
TAKEN FOR GRANTED
Perpetual bonds took off in the
onshore market in December
2013 and the format became
popular in 2015 and 2016 as
it allowed issuers to book the
securities as equity in their
accounts, thereby reducing their
In the past five months, they
have raised US$5.45bn, of which
US$3.03bn has been offshore.
Most of these borrowers have
met with a strong receptions
from lenders even when
returning for more than one
borrowing. FAR EAST HORIZON, a
unit of state-owned chemicals
conglomerate Sinochem Group,
is in the market for a US$800m-
equivalent three-year bullet loan,
only three months after raising a
similar-sized facility.
The new loan pays a top-level
all-in pricing of 155bp, based on
an interest margin of 130bp over
Libor/Hibor, close to the 158.33bp
all-in via the same margin on
the previous loan completed in
November.
That loan attracted 13 banks
in general syndication and had
five mandated lead arrangers and
bookrunners. Eight banks are
MLABs on the new loan. Far East
gearing, and attracted investors
looking for yields in a bullish
market.
Coupon resets and step-up
clauses are common in offshore
perpetual bonds. Resets give
investors some protection against
rising rates, while steep step-ups
provide issuers with an incentive
to redeem bonds at the first
opportunity.
Jilin Forest’s coupon reset
broke an implicit rule in China
that issuers must redeem the
notes at the first call date and
prompted investors to rethink
strategies involving the format.
“The unspoken rule for perps
has been that issuers must and
will redeem bonds at the first
call date. Both investors and
underwriters have taken that for
granted,” said a Shanghai-based
syndicate banker at a Chinese
bank.
He said perps had been touted
in the past few years as illiquid
but higher-yielding bonds, with
issuers offering premiums of
40bp–50bp over bullet bonds.
A Shenzhen-based DCM

Horizon is also raising a three-
year onshore loan of Rmb1.8bn
(US$184m).
Chinese leasing companies
present a seductive growth
story for lenders. Leasing units
of Chinese banks, with ratings
from Fitch, grew their assets at
an average compound annual
growth rate of 21% between 2011
and 2016, the rating agency said
in a report last May.
In a separate report later last
year, Fitch said the sector and
rating outlooks for Chinese
leasing companies were stable,
reflecting continued sovereign
and institutional support, and
expanding growth and funding
opportunities.
However, some lenders in the
retail syndication market are
warning that they are nearing
their lending limits.
“Our exposure to the leasing
industry has almost hit the
internal limit, as we have been
very supportive of leasing
companies in the past few years,”
said a loan banker at a Taiwanese
bank in Hong Kong. „
banker noted that the precedent
had made investors think for the
first time about the possibility
of never getting their principal
back.
With Jilin Forest’s perps
becoming ever more equity-
like over time if they are not
redeemed, fund managers could
find themselves in violation of
their investing mandates if they
hold them in their portfolios, he
said.
“It [the Jilin Forest incident] is
a disaster for perpetual bonds,”
said the DCM banker. “Investors
are definitely rethinking about
such notes and will ask for more
premiums.”
Market participants expect
onshore perpetual bond issuance
to decelerate and potential
issuers to be limited to top-
quality state-owned companies,
which are under government
orders to reduce their debt levels.
Jilin Forest held a bondholder
meeting last Friday behind closed
doors to discuss the decision not
to call the bonds. The company
declined to comment. „
India bends sub debt rules
„ Bonds Regulator makes exceptions for state-owned insurers in need of capital
BY KRISHNA MERCHANT
Indian state-owned insurance
companies are getting a
pass from regulators to raise
subordinated debt as the
government prepares to enlist
them in a bid to extend health
coverage to half a billion poor
people.
Whereas the Indian banking
regulator has repeatedly
relaxed requirements to make
it easier for all banks to make
payments on their Tier 1
capital securities, the insurance
regulator has been granting
exemptions on a case-by-case
basis to specific state-owned
general insurers.
UNITED INDIA INSURANCE (UIIC)
raised Rs9bn (US$141m)
from a maiden offering of
subordinated bonds, pricing
the 10-year non-call five notes
at 8.25%. Crisil, which assigned
a AAA (stable) rating to the
deal, said this took into account
forbearance from the Insurance
Regulatory and Development
Authority of India, which
allowed UIIC to service interest
throughout the life of the
instrument, irrespective of
its solvency ratio. Brickwork
assigned an identical rating to
the instruments.
Normal IRDA rules do not
allow insurers to make interest
payments on such securities
if their solvency ratio is below
1.5.
UIIC was able to issue
subordinated bonds
even though its reported
solvency ratio was 1.08 as
of last September, below
the minimum regulatory
requirement, because
of a deterioration of its
underwriting performance,
according to Crisil. The ratio is
expected to rise above 1.5 after
the fundraising, according to
Icra.
IRDA has also allowed UIIC
to issue subordinated debt
equivalent to 50% of its net
worth, above the 25% limit for
International Financing Review Asia February 10 2018
other insurers.
Last March, NATIONAL INSURANCE
raised Rs8.95bn from 10-
year subordinated bonds at
8.35% after similar regulatory
forbearance was granted to the
company.
“The rules are rewritten by
the regulator for insurance
companies, which are
facing losses, because these
relaxations are not given to
private sector companies,” said
a source away from the UIIC
deal.
UIIC reported a net loss of
Rs19.13bn in FY17 compared to
a profit of Rs2.21bn in FY16.
“It is a practical solution for
a government, which is under
fiscal deficit stress,” the same
source said.
Since July 2016, 11 insurance
companies have raised Rs28bn
from subordinated bonds,
according to Prime Database,
after the regulator issued
guidelines allowing them to tap
the Tier 2 market.
“State-owned insurance
companies will find
subordinated bonds an efficient
avenue to shore up solvency
ratio at a relatively cheaper
cost, as compared to raising
equity capital,” said Krishnan
Sitaraman, senior director at
Crisil Ratings.
“While reported solvency
ratios of some state-owned
insurance companies are low,
they have equity investments
that have substantial unbooked
appreciation. If required, they
can sell some of their equity
investments and realise the
gains on their books, which can
help enhance their reported
solvency ratios,” he said.
The adjusted solvency ratio
for UIIC was 2.13 as of last
September, according to Crisil.
UIIC’s issue found tepid
demand, however, and was
kept open for two days. Life
Insurance Corporation of India
is rumoured to have bought
half of the subordinated bonds,
while public-sector insurance
For daily news stories
visit www.ifrasia.com
companies picked up the
remainder.
Analysts say such cross-
holdings of subordinated debt
among insurance companies
does not necessarily increase
systemic risk.
“This is because the size
of the investment in such
securities is quite small in
proportion to their overall
investment portfolio,” said
Sitaraman of Crisil.
“Subordinated bonds are
of longer tenor. In the Indian
context, investors in longer-
tenor bonds typically include
insurance companies and
pension funds.”
FUNDING HEALTHCARE
In the budget for 2018/19,
the government widened its
fiscal deficit target to finance
a sharp rise in spending on
rural areas and healthcare. It
also suggested the possibility
of a mega IPO from the state-
owned insurance sector after
unveiling plans to merge state-
owned general insurers ORIENTAL
INSURANCE, National Insurance
and United India Insurance for
a listing as one entity, without
indicating the timeframe.
The government also
announced a plan to provide
health insurance to 500 million
poor people, which would
require an estimated Rs110bn
in federal and state funding
each year. Government health
insurance companies have
agreed to fund this programme,
according to a Reuters report.
Many bankers believe that
raising subordinated debt
will eventually pave the way
for state-owned insurance
companies to merge, list and
fund the massive healthcare
programme.
Among other public-sector
insurance companies, Oriental
Insurance has been talks with
bankers to issue subordinated
bonds. It has yet to make an
official announcement on the
plan. „
11
 People
& Markets
TOP STORY REGULATION
Hong Kong loosens IPO pricing rules
Bankers welcome plan to allow below-range pricing
Bankers in Hong Kong have welcomed the
local bourse’s plan to let issuers price IPO
shares below the indicative range, saying
THATûTHEûADDITIONALûmEXIBILITYûWILLûHELPûINû
challenging market conditions.
In a February 2 guidance letter, the Stock
Exchange of Hong Kong, a subsidiary of
Hong Kong Exchanges and Clearing, allows
issuers to price shares as much as 10%
BELOWûTHEûlXEDûINDICATIVEûOFFERûPRICEûORûTHEû
bottom end of the indicative price range,
IPO at HK$1.13 (US$0.14), below the
indicated range of HK$1.40–$1.71, to raise
HK$3.39bn.
The new pricing mechanism applies only
if the span between the top and the low
ends of the indicative price range does not
exceed 30%.
Issuers must also disclose in the
listing committee after 12 months.
US RIVALRY
The reform brings Hong Kong closer to
other jurisdictions, most notably the US,
which allows issuers to both upsize or
downsize IPOs provided the changes do not
exceed 20% of the maximum offering price
initially stated.
In the last few years, the US Securities
and Exchange Commission’s rules have
subject to certain conditions.
Under the previous system, any issuer
wanting to price an IPO below the range
had to issue a supplemental prospectus
“I can’t think of a single deal MAINLYûBENElTEDûTECHNOLOGYûCOMPANIESû
which have taken advantage of investor
I’ve worked on where the appetite to price above the range.
withdrawal mechanism has When Facebook listed in 2012,
ANDûASKûINVESTORSûTOûRECONlRMûTHEIRûORDERSû
referred to as the withdrawal mechanism.
“I can’t think of a single deal I’ve worked
on where the withdrawal mechanism
has been used,” said the head of equity
capital markets at one major bank. “The
been used. The timing required
means that you have no option
but to pull the deal and wait
for a more favourable time to
overwhelming retail demand allowed the
tech giant to increase the price range from
53nûTOû53nûBEFOREûPRICINGûATû
the top end of the new range.
Hong Kong has, in the last year, seen a
timing required means that you have
no option but to pull the deal and wait
for a more favourable time to relaunch.
I’ve been saying for quite some time that
the exchange needs to look at this. It is
important as sometimes the market can
move against you unexpectedly.”
relaunch.”
prospectus that they are using the new
PRICINGûMECHANISMûINûORDERûTOûBENElTûFROMû
it.
SEHK has not listed any restrictions on
mURRYûOFûTECHû)0/SûWHICHûHAVEûATTRACTEDû
huge demand from investors. Last
November, Chinese online car retailer Yixin
raised HK$6.77bn after selling shares at the
top end of the indicative price range.
Tencent Holdings’ online publisher,
China Literature, also priced at the top
ENDûOFûTHEû(+nûINDICATIVEûRANGEû
Bankers said the withdrawal mechanism THEûTYPESûOFûISSUERSûABLEûTOûBENElTûFROMûTHEû INûTHEûSAMEûMONTHûRAISINGû(+BNû
WASûlRSTûUSEDûINûûATûTHEûHEIGHTûOFû new guidelines. In September, Chinese online insurer
THEûlNANCIALûCRISISûWHENûSHOPPINGûMALLû
operator Renhe Commercial priced its
Singapore,
Malaysia to renew
trading link
Singapore and Malaysia plan to establish a
trading link between their stock markets,
16 months after shuttering a similar,
though less comprehensive, scheme
involving Thailand’s bourse.
The Monetary Authority of Singapore
and the Securities Commission Malaysia
announced plans last week to allow
investors in Singapore and Malaysia to
trade shares on each other’s exchanges.
Singapore Exchange and Bursa Malaysia
said they would collaborate on post-trade
12
The changes are effective immediately
on a pilot basis and will be reviewed by the
arrangements, including clearing and
settlement. Meanwhile, MAS and SC said
they would set up cross-border supervisory
and enforcement arrangements.
The renewed collaboration between the
stock markets in Singapore and Malaysia
follows the ultimately unsuccessful ASEAN
Trading Link, launched in 2012. SGX
and BM were founding members of that
initiative, before the Stock Exchange of
Thailand joined later the same year.
That scheme was designed to include
the bourses in Indonesia, Vietnam and the
Philippines eventually as part of efforts to
improve integration between South-East
Asia’s capital markets.
However, trading volumes failed to pick
up, and SGX announced last year that the
scheme would be abandoned, without
International Financing Review Asia February 10 2018
ZhongAn Online P&C Insurance also priced
at the top to raise HK$11.9bn.
giving a reason.
Under that scheme, US software
company SunGard set up an order system
that allowed all three exchanges to receive
live price feeds from one another.
However, brokers still had to rely on
their counterparts in other markets to
execute trades and deal with the clearing
and settlement. So, the link was not seen as
an improvement on the status quo.
The latest efforts from Singapore and
Malaysia to establish a trading link promise
to address these issues.
“The two countries have made it clear
that they will collaborate on post-trade
arrangements. It will be an end-to-end
connect scheme, but it is still early days to
know what model they will use,” said Alvin
Goh, head of securities services for the
 Please send job moves to
peoplemarkets@thomsonreuters.com

Bankers were more circumspect,

however, about whether the exchange CBA expects on CBA’s results. The bank reported a fall in
lRST
HALFûCASHûPROlTûFORûTHEûlRSTûTIMEûINûNINEû
should allow issuers to price above the
range. A$375m money- years.
)TSûCASHûPROlTûFELLûûTOû!BNûFORûTHEû
“If you put yourself in a retail investor’s
shoes, you may be investing on margin,” laundering fine six months to end-December, as opposed to
said one ECM banker. “If a deal has priced
above the top end of the range, the investor
WILLûRUNûINTOûDIFlCULTIESû)ûCANûUNDERSTANDû
why the exchange wants to be protective of
them given their importance in the Hong
Kong IPO market.”
SEHK issued another guidance letter on
IPO allocations on February 2, again aimed
COMMONWEALTH BANK OF AUSTRALIA expects to
BEûlNEDûAROUNDû!Mû53M ûFORû
money laundering after a probe which has
cast a shadow over the major lender in recent
months.
CBA booked the provision in its results for
THEûlRSTûHALFûOFûITSûlNANCIALûYEAR
ANûANTICIPATEDûûRISEûINûPROlTûACCORDINGûTOû
seven analysts Reuters polled.
REVENUE GROWTH
Its underlying results were strong as
OPERATINGûINCOMEûROSEûûTOû!BNûONû
the back of higher net interest income, in
particular.
Net interest income was up 6% to
at shoring up protection for investors. “The group believes this to be a reliable !BNûWHICHûTHEûBANKûATTRIBUTEDûTOûAû
Under current rules, when the retail estimate of the level of penalty that a mixture of loan growth and an increase in its
TRANCHEûISûATûLEASTûûTIMESûOVERSUBSCRIBEDû court may impose. This takes into account deposit base.
shares are automatically reallocated currently available information including Its institutional bank continued to struggle
to retail investors under the clawback
mechanism.
The new guidelines state that when
the the placement tranche of an IPO is
undersubscribed, or fully subscribed but
THEûRETAILûTRANCHEûISûLESSûTHANûûTIMESû
oversubscribed, issuers can only reallocate
shares from the placement tranche to the
retail portion of not more than double the
initial allocation to the retail tranche or not
more than 30% of the total offered shares.
“The placing tranche reallocation
guidance letter aims to better protect
investors who subscribe for shares under
legal advice received by the group in relation
to Austrac’s claims,” the bank said in a
statement.
CBA was referring to the proceedings
!USTRALIANûlNANCIALûCRIMEûAGENCYû!USTRACû
“The group believes this to be
a reliable estimate of the level
of penalty that a court may
impose. This takes into account
currently available information
including legal advice received
WITHûCASHûPROlTûDOWNûûTOû!Mû
mostly because a lack of volatility hurt its
markets business.
The bank’s common equity Tier 1 ratio
stood at 10.4%, just a fraction short of the
ûTARGETûTHEû!USTRALIANû0RUDENTIALû
Regulation Authority has set for the big four
banks by 2020.
CBA cautioned, however, that its CET1
ratio would fall from July 1 onwards as
it adopted the new AASB 9 accounting
standards, which would raise provisions.
Rival NATIONAL AUSTRALIA BANK last Thursday
REPORTEDûAûûRISEûINûlRST
QUARTERûCASHûPROlTû
the public subscription tranche by limiting
how such investors are allocated shares
which are not taken up by institutional
and professional investors for whatever
reasons,” said David Graham, HKEx’s chief
REGULATORYûOFlCERûANDûHEADûOFûLISTING
THOMAS BLOTT
TERRORISMûlNANCINGûLEGISLATION
by the group in relation to
Austrac’s claims.”
launched in federal court last year for alleged
breaches of anti-money laundering and
COUNTER
The quarterly result was boosted by a
driven by the lowest quarterly bad debt
charge in two years.
Australia’s fourth-biggest bank by market
value posted unaudited cash earnings of
!BNûFORûTHEûTHREEûMONTHSûENDEDû
December 31.
ASEAN region at Citigroup.
Similar trading schemes exist between
the Hong Kong stock exchange and those of
Shanghai and Shenzhen.
!USTRACûALLEGESûTHATûFROMûûUNTILûû
CBA oversaw tens of thousands of illicit
transfers, amounting to A$624.7m, including
some involving known criminal gangs.
CBA has blamed a coding error for most of
the alleged breaches, although it is contesting
some of the other charges.
Each breach carries a maximum penalty of
23% decrease in bad and doubtful debts to
A$160m, representing the lowest bad debt
charge since the quarter ended December

Its CET1 ratio rose slightly to 10.2% at the
end of December versus 10.1% at the end of
September.
WESTPAC BANKING CORPORATION said last
According to Hong Kong Exchanges and
Clearing, total northbound trading volumes
in 2017 hit Rmb2.27bn (US$361m), a 194%
year-on-year increase, while southbound
turnover grew 170% year on year to
(+BNû53M 
Under both Stock Connect schemes,
HKEx’s subsidiary, Hong Kong Securities
Clearing Company, and its mainland
equivalent, China Securities Depository
and Clearing Corporation, entered into an
agreement, whereby the former provided
settlement services for northbound trades
and the latter for southbound ones.
THOMAS BLOTT
!MûLEAVINGûTHEûBANKûTHEORETICALLYûFACINGû
AûlNEûOFûALMOSTûAûTRILLIONû!USTRALIANûDOLLARS
However, most analysts had expected a
lNEûOFûAROUNDû!M
4HEûSCANDALûTRIGGEREDûAûmOODûOFû
resignations, including that of CEO Ian
Narev, the scrapping of bonuses for senior
executives, and laid the groundwork for a
Royal Commission to look at the conduct of
lNANCIALûSERVICESûlRMS
CBA also booked expenses of a further
A$200m related to regulatory and compliance
costs, which includes outlays related to the
Royal Commission.
4HEûCOMBINEDû!MûCHARGEûWASûAûDRAGû
International Financing Review Asia February 10 2018
Monday its stressed assets fell in the three
months to December 31, down 2bp quarter
on quarter to 1.03%.
)TûALSOûANNOUNCEDûPLANSûTOûRAISEû!Mû
in capital through the launch of new hybrid
securities.
The bank’s Tier 1 capital ratio was 10.1% at
the end of December, lower than the 10.6%
reported at the end of September.
7ESTPACûDOESûNOTûDISCLOSEûPROlTûORûREVENUEû
numbers in its quarterly trading updates.
Australia and New Zealand Banking
Group said earlier this month it would stop
reporting quarterly earnings.
THOMAS BLOTT
13
 People
& Markets

StanChart redeployed in other parts of its main

corporate banking unit that StanChart is
Reuters could not immediately obtain
prunes coverage,
may cut IB jobs
STANDARD CHARTERED is shifting its focus by
boosting lending to key industries and
clients in a move that could cut about a
dozen investment banking jobs as it dials
back in areas like private equity, sources
told Reuters.
The Anglo-Asian bank is expanding
into consumer-led industries including
pharmaceuticals and healthcare, while
continuing to build on its strong client base
trying to strengthen.
The changes form part of a two-year
overhaul at the bank – triggered in part by
a spike in non-performing loans in China
and India – that investors hope will help
StanChart return to higher revenue growth.
StanChart is shifting power back towards
more traditional relationship bankers
who control straightforward lending to
corporate clients and away from coverage
bankers, who tend to specialise in M&A and
other banking products.
Among the senior bankers leaving
StanChart is Hong Kong-based Ken Tung,
who led the coverage of private-equity
CONTACTûDETAILSûOFûTHESEûOFlCIALSûWHILEû
a spokesman for StanChart declined to
comment on individual moves.
StanChart continues to hire in its core
banking business and has in recent months
brought Andrew Au on board as head of
global banking for Greater China and North
Asia, and Rob Snell as global subsidiaries
head.
The bank’s M&A advisory services will
now be more geared towards its existing
priority clients, who would also have credit
appetite to fund acquisitions, one source
with knowledge of the matter said.
“We are investing in the coverage model
and we have built everything around the
of oil and gas as well as metals and mining.
It will, however, be selective
in sectors such as technology and
telecommunications that are more heavily
dominated by US investment banks.
Some of those jobs will likely be
Macquarie Group
lRMSûINû.ORTHû!SIAûSAIDûONEûSOURCE
Other recent departures include Stephen
Priestley, who led coverage of companies in
Africa and the Middle East, and Darcy Lai,
who covered clients in Greater China and
North Asia.
expected, but they are getting caught in
the overall panic in markets,” said Hugh
client. We want to be relevant to them and
we need to make sure that our coverage
bankers are producing for them,” said
StanChart’s global head of banking, Paul
Skelton.
SUMEET CHATTERJEE, LAWRENCE WHITE
adding the bank was “positioned to deliver
superior performance in the medium term”.

projects record $IVEûCHIEFûINVESTMENTûOFlCERûATû!TLASû

Funds Management, which holds Macquarie
Macquarie said its group tax rate would go
down 3%-4% in the medium term as a result

profit growth SHARESûh-ACQUARIEûSHOULDûBENElTûFROMû

volatility and a lower Australian dollar,
of US tax cuts, although no change was
EXPECTEDûINûTHEûCURRENTûlNANCIALûYEAR
but risk aversion is driving all listed asset Its effective tax rate in the US would fall by
MACQUARIE GROUP said last Tuesday it expected
NETûPROlTûFORûTHEûYEARûTOû-ARCHûûTOûGROWû
ûTOûAûRECORDûOFûABOUTû!BNû53BN û
due to its asset management, proprietary
investing and banking services units.
In a trading update, Australia’s biggest
INVESTMENTûBANKûSAIDûTHEûPROlTûCONTRIBUTIONû
in the nine months to end-December from
those “annuity-style businesses” was higher
year on year, offsetting lower earnings from
market-facing businesses.
“The outlook was slightly better than
14
managers down.”
Macquarie makes money from M&A
advisory and fees from trading in
commodities, shares and currencies, but it
also collects fees based on the performance
of its global funds, which have proven to be
a less volatile source of income.
About 60% of the Sydney-based bank’s
income comes from outside Australia.
“Trading conditions across the group were
satisfactory in the December 2017 quarter,”
CEO Nicholas Moore said in a statement,
International Financing Review Asia February 10 2018
ABOUTûûFROMûTHEûSTARTûOFû&9ûITûSAID
The bank’s asset-management business,
its biggest-earning unit, saw a 2% quarter-
on-quarter increase in assets under
management as of December 31.
The group said its A$1bn share-buyback
programme remained in place, though it
DECLINEDûTOûPROVIDEûAûSPECIlCûTIMINGûFORûIT
Macquarie’s common equity Tier 1 capital
ratio stood at 10.7% as of December 31,
versus 11% as of September 30.
PAULINA DURAN

Singapore says
more covered
bonds, please!
Singapore’s major banks have repeated
calls for a relaxation of the cap on covered
bond issuance to promote the development
of a local market for senior secured bonds.
The Monetary Authority of Singapore’s
encumbrance limit restricts banks from
using more than 4% of their assets as
DBS, OCBC and United Overseas
Bank have raised more than US$7bn
from covered bonds in the offshore
market. However, other Singapore-based
banks, which are subsidiaries of foreign
institutions and have smaller asset bases,
have found the limited size of their issues
unviable, given that the cost of establishing
a covered bond programme might run into
millions of dollars. Some might only be
able to issue one benchmark-sized bond
before reaching the encumbrance limit.
These smaller banks are likely to be
the main issuers of Singapore dollar-
Please send job moves to
peoplemarkets@thomsonreuters.com
Banks must exclude their high-quality
liquid assets when calculating their total
assets, reducing the total amount they can
issue under the encumbrance limit.
“In that sense, our 4% is a very high-
quality 4%,” said Ang.
Bankers have suggested that the MAS
could allow HQLAs to be counted towards
total assets, increasing the amount of
covered bonds each bank can issue, rather
than raise the encumbrance limit.
h4HEREûISûSOMEûmEXIBILITYûFORûUSûASû
a jurisdiction to tweak that without
changing the number,” said Brandon Goh,
security for covered bonds. As a result, only denominated covered bonds because DBS, lRSTûVICEûPRESIDENTûCENTRALûTREASURYûATû
the city’s biggest banks have sold covered OCBC and UOB have such low costs of UOB.
bonds, and none have issued in the local funding in their home currency that they Australia and New Zealand have higher
market. would rather save their encumbrance ENCUMBRANCEûLIMITSûOFûûANDûû
“We are somewhat constrained by the limits to issue offshore at tight spreads. respectively, while some other jurisdictions
encumbrance limit,” said Yeoh Hong Nam, As a result, no bank has established have no limits at all.
executive director, head of wholesale programmes to issue covered bonds in Speaking earlier at the same conference,
funding at DBS Bank, speaking last Tuesday
at the Euromoney/European Covered Bond
Council Asian Covered Bond Forum in
Singapore.
“We need to balance our presence in
the market to maintain investor access,
but need to maintain reserve capacity for
issuance in stressed conditions.”
WHO’S MOVING WHERE...
„ DEUTSCHE BANK has appointed Duncan Mann and
Apurva Shah as co-heads of financial sponsors for
Asia Pacific. They replace Mohamed Atmani, who is
leaving the bank.
Mann has been with Deutsche some eight years
and was promoted to managing director last year.
He is due to relocate from Sydney to Hong Kong
shortly.
Shah is a Mumbai-based managing director and
has been with Deutsche since 2005. He has also
worked at Citigroup and Merrill Lynch.
Deutsche hired Atmani as regional head of
financial sponsors only 16 months ago. He has
worked at UBS, Credit Suisse and ABN AMRO.
„ FIDELITY INTERNATIONAL has named Jenn-Hui Tan
head of capital markets and corporate governance
for Asia Pacific.
He replaces Kirsty Mactaggart, who left last year
as head of equity capital markets and corporate
finance.
Tan has been with Fidelity for over 10 years and,
until his new post, was director for corporate
finance.
Based in Singapore, he reports to Tim Orchard,
chief investment officer for APAC ex-Japan.
„ HOULIHAN LOKEY has hired Edward Middleton as
co-head of financial restructuring in Asia.
Singapore dollars so far.
“Four per cent is a reasonable starting
point, but, for longer-term development, I
would think having a higher limit would
enable the development of the covered
bond market in Singapore,” said Ang
Suat Ching, head of funding and capital
management at OCBC Bank.
Based in Hong Kong, he was recently a partner
at KPMG where he was head of its restructuring
services practice in China and Asia-Pacific for the
last 10 years.
Middleton has been appointed co-head alongside
Brandon Gale, who has been with the US
investment bank since 2004 and relocated to
Singapore in 2013.
„ SC LOWY has hired Rajiv Mareachealee to lead its
Hong Kong-based debt capital markets business.
Mareachealee has worked at Credit Agricole,
where he was last head of high-yield capital
markets and special situations in Asia.
He has also been with investment firm Sandell
Asset Management, Dresdner Kleinwort
Wasserstein, Merrill Lynch and Bear Stearns.
Florian Schmidt, who was head of DCM at SC Lowy,
recently left to start his own consultancy firm.
„ BLACKROCK has hired Kimberly Kim as head of its
financial institutions group for Asia Pacific, a newly
created position.
Based in Hong Kong, Kim will report to Andrew
Landman, head of client business for APAC,
and David Lomas, head of the global financial
institutions group. She is due to start in April.
Kim joins from Deutsche Asset Management,
where she was most recently head of the global
International Financing Review Asia February 10 2018
!LANû9EOûDIRECTORûOFûTHEûlNANCIALûMARKETSû
development department at MAS, said
it had received feedback from market
participants about raising the encumbrance
limit. There was no indication, however, of
whether MAS planned to raise the limit or
change how it was calculated.
DANIEL STANTON
client group for Hong Kong and regional head of
insurance coverage for APAC ex-Japan.
„ Alan Butterfield has joined Australian fintech
firm FC CAPITAL in Sydney as head of the credit
opportunities fund.
FC Capita offers commercial lending and
investment banking services, as well as a range
of technology-driven products focussed on small
to medium-sized enterprises in Australia and
elsewhere.
Butterfield, an experienced leveraged-finance
banker, was managing director of boutique
corporate advisory firm Buttress Investments
for close to four years after leaving GE Capital in
2014. At GE Capital, he was head of leveraged and
sponsor finance for Australia and New Zealand.
„ Mitsubishi UFJ Financial Group has reshuffled
its investment banking division, promoting Saburo
Araki to president and CEO of MITSUBISHI UFJ
SECURITIES HOLDINGS.
Araki has also been made president and CEO of
Mitsubishi UFJ Morgan Stanley Securities, the
majority-owned securities joint venture with the
US bank.
MUFG also has another securities JV with Morgan
Stanley, Morgan Stanley MUFG Securities, which
the US bank controls. The changes at the other JV
have no impact on it.
Araki, 60, is an MUFG lifer, having joined
15
 People
& Markets
Mitsubishi Bank, its predecessor, in 1981. He has
held several senior positions, including recently as
head of the corporate banking unit.
Before this stint, he was a general manager in the
human resources division, a common career path
for senior executives at Japan’s megabanks.
Araki replaces Takashi Nagaoka, who has been
appointed chairman of Mitsubishi UFJ Securities
Holdings and deputy chairman of the Morgan
Stanley JV.
Nagaoka, 63, joined Mitsubishi Bank in 1976. His
background is in equity capital markets, although
he has had stints in retail and corporate banking.
In both roles, he replaces Toshirou Toyoizumi, who
is retiring and has been appointed senior adviser
for the securities division.
The changes take effect on April 1.
„ Andy Yung has resurfaced at DBS BANK,
Hong Kong, after a brief stint at Bank of
Communications, Hong Kong.
Yung started in January as vice president on the
IN BRIEF
Monetary Authority of Singapore
No cryptocurrency trading ban yet
Singapore’s central bank has been studying
the potential risks that cryptocurrencies pose,
though there is no strong case, as yet, to ban
trading of the digital coins in the city-state,
according to Deputy Prime Minister Tharman
Shanmugaratnam.
“Cryptocurrencies are an experiment. The
number and different forms of cryptocurrencies
is (sic) growing internationally. It is too early to
say if they will succeed,” Shanmugaratnam said.
“If some do succeed, their full implications
will also not be known for some time,” the
deputy prime minister said in a written answer
to questions from members of parliament on
banning the trading of bitcoin or cryptocurrency.
“The Monetary Authority of Singapore has been
closely studying these developments and the
potential risks they pose. As of now, there is no
strong case to ban cryptocurrency trading here.”
Bank Mandiri
Profit soars 49% on lower provisions
State-controlled BANK MANDIRI saw its 2017
net profit soar 49% year on year to Rp20.6trn
(US$1.52bn) on lower provisioning for soured
loans, as well as rapid growth in fee-based
income.
Indonesia’s largest bank in asset terms said
the growth last year marked a rebound from its
worst showing in five years in 2016.
Mandiri’s provisions for bad loans declined
35% to around Rp15.95trn, while its gross non-
16
loan origination team with a focus on North Asia.
He reports to Stockor Ng, senior vice president and
team head for syndicated finance at DBS Bank
Hong Kong.
Yung was deputy chief product manager
in BoCom’s structured and capital finance
department for about two months.
Before BoCom, Yung was at HSBC, where he was
last an associate director of the loan syndication
team.
„ Frank Sun, former head of Asia healthcare
investment banking at UBS, has joined private-
equity firm YUNFENG CAPITAL as managing director.
Alibaba chairman Jack Ma jointly set up the firm in
2010 with David Yu, founder of display advertising
company Target Media.
Sun is not the first former investment banker to
head to Yunfeng as former Goldman Sachs banker
Yali Zhu joined last year as head of its Hong Kong
brokerage.
After spending 11 years with the Swiss investment
performing loan ratio fell to 3.46% from 4.00%
a year earlier.
The bank has been under pressure to tackle bad
debt after provisioning rose in recent years with
NPL spreading beyond the commodities sector
to consumer-related businesses.
Fee-based income grew 16.4% in 2017.
Mandiri’s net interest income last year rose 1%,
while its net interest margin came in at 5.87%,
versus 6.44% in 2016.
DBS Group
Higher NIM projected in 2018
DBS GROUP expects an improving interest rate
environment to lift its 2018 net interest margin,
having reported a 33% increase in quarterly
profit, on par with market expectations.
The results came after the bank had surprised
markets in November with a doubling of its
quarterly provisions for the troubled oil-and-gas
sector and said the worst was probably over.
Kicking off the reporting season for Singapore
banks on Thursday, DBS said its NIM rose 7bp
to 1.78%.
South-East Asia’s largest bank in asset terms
reported net profit of S$1.2bn (US$905m) for
the 2017 fourth quarter versus S$913m a year
earlier. This matched the S$1.2bn average
estimate of six analysts in a Thomson Reuters
survey.
CEO Piyush Gupta said the driver of full-year
performance was broad-based growth in loans
and fee income, which more than offset the
impact of less favourable interest rates and
trading income.
International Financing Review Asia February 10 2018
bank, Sun was one of a number of investment
bankers to leave last year. He had also worked at
Morgan Stanley.
„ FLAGSTAFF PARTNERS, an Australian boutique
advisory firm, has hired Matt Wilson as managing
director from JP Morgan.
Wilson was head of healthcare and technology,
media and telecommunications coverage and
co-head of financial sponsors coverage for the US
bank in Australia and New Zealand.
He was with JP Morgan for over 10 years and spent
just over three years at Macquarie Bank.
Flagstaff has also promoted Steve Hammerton and
James Hawkins to MD.
Hammerton joined Flagstaff in 2009 and was
previously a director in Merrill Lynch’s London
and Melbourne offices. He has worked at
PricewaterhouseCoopers.
Hawkins has been with Flagstaff since 2011 and
was formerly with Macquarie Capital and law firm
Clayton Utz.
Net fee income grew 23% in the quarter, with
the wider spread across most streams, led by
wealth management and investment banking.
Credit Suisse
HK fines local units for breaches
Hong Kong’s securities regulator has fined the
local units of CREDIT SUISSE HK$39.3m (US$5m)
for internal-control failures that resulted in
regulatory breaches.
Among the breaches were failures to separate
client securities, report direct business
transactions, comply with short-selling
requirements, the Securities and Futures
Commission said in an e-mailed statement last
Thursday.
These breaches took place between 2010 and
2016.
Credit Suisse had reported the regulatory
breaches and failings to the SFC and involved its
senior management to address the regulatory
concerns at an early stage, the SFC pointed out.
“In this instance, Credit Suisse’s prompt and
extensive co-operation have significantly
expedited the effective resolution of the issues
that caused the SFC’s concerns,” said SFC
executive director of enforcement Thomas
Atkinson.
“Otherwise, the sanctions for similar failures
would have been substantially higher.”
Credit Suisse said it had taken “appropriate
action to ensure its legal and regulatory
obligations were upheld at all times” and to
prevent repetition of these incidents.
“The resolution announced by the SFC today
does not place any constraints on Credit Suisse’s
business activities in Hong Kong or elsewhere.”

Australia 17 Cambodia 18 China 19 Hong Kong 25 India 25 Indonesia 26 Japan 28 Malaysia 29
New Zealand 30 Philippines 30 Singapore 30 South Korea 31 Taiwan 32 Thailand 33 Vietnam 33
AUSTRALIA
DEBT CAPITAL MARKETS
› WESTPAC TARGETS SUB MARKET
WESTPAC has released price guidance at 90-
day BBSW plus 320bp–340bp for Westpac
Capital 5 Notes, an Additional Tier 1 retail
note offer, aiming to raise approximately
A$750m (US$585m).
The new notes, rated BB+ (S&P), include
a reinvestment offer for eligible holders of
the A$1.19bn Westpac CPA AT1 notes due
to be called on March 31.
The offer for the new perpetual non-
Duration jump for Kangaroo bonds
„ Bonds Asian real money investors turn their attention to the 10-year segment
A greatly expanded investor pool is triggering
a run of large, long-dated issues in the SSA
Kangaroo market, in stark contrast to recent
years, when mid-curve trades were in the
ascendancy.
Supranationals and agencies have raised
a combined A$5.9bn (US$4.6bn) from 44
Kangaroo bonds from so far this year, with
A$3.8bn coming via new 10-year and 10.5-
year issues or taps, to take average deal
maturities out to 9.5 years.
This represents quite a shift from early
2017, when just A$1.0bn of the A$4.4bn
year-ago SSA sales total was related to long-
dated Kangaroos, with only three of these
trades raising A$100m or more, the largest
being A$150m.
Small taps or private placements
then dominated the segment, targeting
Japanese life insurers in search of high-
yielding Triple A long-term Australian
dollar bonds to hedge daily inflows from
their Australian dollar-denominated life
insurance policies.
“Japanese insurers still play a large part,
but we are currently seeing much greater
interest from fund managers, central banks
and official institutions, particularly out
of Asia, alongside selective demand from
Australia and Europe,” said Paul White,
global head of syndication at ANZ.
This year has already delivered 13
COUNTRY REPORT
call 7.5-year (September 22 2025) is
expected to open on February 13 and
close on March 6. The margin is due
to be set on February 12 following the
bookbuild.
ANZ, CBA, JP Morgan, Morgans, NAB, UBS
and Westpac’s own syndicate team are joint
lead managers.
The last Australian major bank to sell
domestic AT1 notes was ANZ with last
September’s A$931m ANZ Capital Notes 5.
The perpetual non-call 7.5-year (March 20
2025) floating-rate note priced 380bp wide
of 90-day BBSW.
Also in the subordinated segment,
Westpac privately placed a reverse-enquiry
driven self-led A$150m 10-year non-call
Tier 2 note last Wednesday, priced at three
month BBSW plus 140bp. The following
A$100m-plus long-dated issues, including
two A$500m 10.5-year Kangaroos, from the
ASIAN DEVELOPMENT BANK and last Tuesday’s
INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT print. The previous IBRD 10.5-
year sale in April 2026 raised A$150m.
HIGH-QUALITY BOOK
The latest 10.5-year offering from the World
Bank funding arm confirmed the broadening
real-money investor base.
Central banks and official institutions,
which traditionally focus on the five-year
segment, bought 64%, with asset managers
and insurance companies taking 20%,
while banks and corporates picked up the
remaining 16%. Asia was allocated 88%,
Australia 8% and Europe 4%.
Asian banks, central banks and official
institutions are looking to diversify portfolios
overseas, away from local markets where
property, resource and bank credits tend to
dominate. In doing so, they are drawn to the
recent back-up in yields and relative cost of
funding advantages at the long end of the
Kangaroo curve. The larger, more liquid,
deals now being printed further adds to
their allure.
The AFRICAN DEVELOPMENT BANK priced a
A$360m 3.35% 10.5-year Kangaroo on
January 30 at a yield of 3.38%, a decent
pick-up over the 3.1575% to 3.21% yield
International Financing Review Asia February 10 2018
day the note was tapped for A$75m at the
same margin.
This was Westpac’s second local currency
T2 note, rated Baa1/BBB (Moody’s/S&P), in
recent weeks after January 17’s A$160m
5.0% 30-year bullet EMTN, aimed at Asian
life insurers.
The previous T2 note from an Aussie
major in the domestic market was National
Australia Bank’s ASX-listed A$800m 11.5-
year non-call 6.5 in February 2017, priced at
three-month BBSW plus 220bp.
› AUSNET MTN RAISES A$500M
AUSNET SERVICES HOLDINGS,
rated A3/A–
(Moody’s/S&P), raised A$500m from last
Friday’s 10.5-year domestic MTN sale, the
second and largest corporate domestic bond
range for taps of its July 2027s between April
and October last year.
In absolute yield terms, the ACGB/
Treasury spread had narrowed from around
30bp a year ago, but remained positive at
10bp–20bp during January, whereas the five-
year ACGB fell to flat to Treasuries, having
offered 40bp more juice in early 2017.
“The US dollar market is compelling in the
three-year to five-year segment, while the
10-year-plus Kangaroo segment is attractive
on a comparative cost of funding basis. We
expect this to remain the case unless yields
retreat and/or the cross-currency swap basis
narrows significantly,” White said.
Overall, SSA Kangaroo supply is unlikely
to reach 2014’s recent annual high point of
A$26.0bn, especially if five-year offering
remains in the doldrums. This seems likely
in the near term as the five-year ACGBs/
Treasury spread had fallen to negative
15bp last Thursday as US yields ratcheted
higher. The 10-year spread tightened to
just positive 2bp.
Three-year to four-year issuance withered
after 2011, when the Australian Prudential
Regulation Authority left Kangaroos off its
list of high-quality liquid assets for Basel
III purposes, thereby depleting the natural
bank-balance-sheet demand for this short-
term paper.
JOHN WEAVERS
17
issue of the year so far.
The 4.2% August 21 2028s priced at
99.811 for a yield of 4.2225%, in line with
asset swaps plus 130bp area guidance.
Australia’s four major banks, ANZ, CBA,
NAB and Westpac, were joint lead managers
on the trade.
The AusNet Services subsidiary, Victoria’s
largest energy delivery service, previously
sold a A$425m 4.4% 10.5-year MTN on
February 7 last year, priced 165bp wide of
asset swaps.
The only other Australian corporate
issuer to access the local bond market
in 2018 was fellow utility United Energy
Distribution, rated A– (S&P).
On January 24, UED sold a new A$150m
five-year floating-rate note at three-month
BBSW plus 97bp alongside a A$250m tap of
its 3.85% October 2024 paper at asset swaps
plus 112bp.
››SOLID DEMAND FOR IBRD 10.5-YEAR
The INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT (Aaa/AAA/AAA) overcame
extremely choppy markets conditions last
Tuesday to secure a high-quality order book
for a A$500m 10.5-year Kangaroo issue
via joint lead managers Deutsche Bank and
Nomura.
Central banks and official institutions
bought 64% of the World Bank funding
arm’s latest issue. Asset managers and
insurance companies purchased 20%, while
banks and corporations took the remaining
16%. Asia was allocated 88%, Australia 8%
and Europe 4%.
The 3.3% August 14 2028s priced at
99.846 for a yield of 3.3175%, 42bp wide of
asset swaps and 48.75bp over the May 2028
ACGB.
››CCB SYDNEY SELLS A$150M FRN
CHINA CONSTRUCTION BANK,Sydney branch (A1/
A/A), raised A$150m from last Thursday’s
one-year floating-rate note sale via joint
leads ANZ, CBA and Westpac.
The note priced in line with initial three-
month BBSW plus 55bp area guidance.
The other Australian major bank, NAB,
arranged CCB Sydney’s previous local
trade on February 2, a A$100m tap of its
November 24 2020 floater, priced 91bp
wide of three-month BBSW.
››TOYOTA AUSTRALIA PLANS FIVE-YEAR
TOYOTA FINANCE AUSTRALIA,
rated Aa3/AA–
(Moody’s/S&P), has mandated ANZ, CBA and
NAB for a potential five-year Australian
dollar bond issue.
Toyota Finance Australia previously
visited the local market on November 30
18 International Financing Review Asia February 10 2018
with a A$175m sale of 2.5% three-year
MTNs, priced 60bp wide of asset swaps.
››BNG TAPS 2028S FOR A$50M
The only SSA to access the SSA Kangaroo
market last week for a A$50m or larger
trade, besides the World Bank, was Dutch
public-sector lender BANK NEDERLANDSE
GEMEENTEN (Aaa/AAA/AA+), which tapped
its 3.3% July 17 2028 line for A$50m to
increase the issue size to A$715m.
Nomura and TD Securities were joint lead
managers for Friday’s reopening, priced
at 99.811 for a yield of 3.4425%, 53bp over
asset swaps and 59bp wide of the May 2028
ACGB.
STRUCTURED FINANCE
››BLUESTONE READIES NON-CON RMBS
Specialist residential mortgage lender
BLUESTONE GROUP has released price guidance
for six tranches of an indicative A$250m
non-conforming RMBS issue, Sapphire XVIII
2018-1.
Macquarie is arranger on the issue and
joint lead manager with CBA.
For the A$125m Class A1s, the A$50m
Class A2s and the A$29m Class A3s, all with
2.1-year weighted-average lives, price talk is
one-month BBSW plus 120bp area, 160bp–
165bp and 180bp–185bp, respectively.
For the A$2.5m Class Fs, the A$1.5m
Class Gs and the fixed-rate A$6m Class
X1s, with WALs of 3.6, 2.3 and 1.0 years,
guidance is one-month BBSW plus 710bp–
715bp and 1,050bp–1,010bp and 9% area,
respectively.
The Class B, Class C, Class D and Class E
notes have all been pre-placed.
On November 1, Bluestone printed
A$300m non-conforming RMBS through
Sapphire XVII 2017-2. This followed the
A$250m non-conforming Sapphire XVI
2017-1 trade on May 17.
SYNDICATED LOANS
››VIVA ENERGY SEEKS US$600M REFI
Vitol unit VIVA ENERGY AUSTRALIA is in the
market for a US$600m two-year loan to
refinance a borrowing-base facility raised to
back the 2014 takeover of Shell’s Australian
refining operations and petrol stations.
ANZ, Mizuho Bank, NAB and UOB are leads
on the facility, which has a greenshoe
option to increase the size to US$700m.
In addition, Viva Energy has an option to
extend the loan for another 12 months and
increase the amount to US$900m through
an accordion feature. Borrower VIVA ENERGY
HOLDING is rated BBB– (S&P).
The interest margin is 110bp over
Libor and the upfront fee is 20bp for
commitments of US$50m or US$100m. A
roadshow took place in Singapore last week
and Sydney on Monday. Commitments are
due on March 9.
Viva Energy owns more than 900 Shell
service stations, with support from 20 fuel
import and storage terminals and Victoria’s
Geelong refinery. In 2016, Vitol carved
out the freehold properties underpinning
the fuel retailing and convenience store
network of Viva Energy and spun it off into
listed property trust Viva Energy.
››LOY YANG B ACQUISITION LOAN CLOSES
A five-year loan of A$715m (US$562m)
backing ALINTA ENERGY’s acquisition of the
Loy Yang B power plant in Australia from
Engie and Mitsui & Co closed at the end of
last year.
The facility comprised a A$50m revolving
credit for capital expenditure, a A$15m
revolver for working capital and a A$650m
term loan. The interest margin is 235bp
over BBSY and the commitment fee is 40%
of the margin.
The lenders were ANZ, Bank of China, DBS
Bank, Intesa Sanpaolo, Standard Chartered,
SMBC and UOB, with LATROBE VALLEY POWER
(FINANCE) as the borrower.
Alinta paid more than A$1.1bn for the
935MW power plant, the newest and most
efficient coal-fired generator in Victoria
state.
CAMBODIA
SYNDICATED LOANS
››ACLEDA LOAN GOES TO 11 LENDERS
A five-year offshore loan for ACLEDA BANK,
doubled in size to US$100m, was allocated
to 11 banks with Shin Kong Commercial
Bank as sole mandated lead arranger and
bookrunner.
The loan, which is for working capital,
carries an interest margin of 350bp over
Libor and has a four-year average life. Banks
were offered an all-in pricing of 360bp, via
a 40bp upfront fee.
Japan’s SMBC holds an 18.25% stake in
Acleda, Cambodia’s largest lender, while
Cofibred, a subsidiary of Paris-based Bred
Banque Populaire, and Japan’s Orix own
12.25% each.
For full allocations, see www.ifrasia.com.

CHINA
DEBT CAPITAL MARKETS
››GREENLAND DRAWS ROBUST ORDERS
GREENLAND HOLDING GROUP, rated Ba1/BB/
BB, drew final orders of US$1.9bn for a
US$700m dual-tranche offering of US dollar
senior unsecured notes.
The Chinese property developer priced
on February 2 US$400m of 5.25% three-year
notes at 99.317 to yield 5.50% and US$300m
of 5.90% five-year notes at 99.043 to yield
6.125%, both at the tight end of final
guidance ranges and well inside the initial
5.750% area and 6.375% area, respectively.
Proceeds will be used for debt
refinancing and general corporate
purposes.
The three-year tranche drew orders of
US$1.1bn from 47 accounts. Asia took 87%
and Europe got 13%. In terms of investor
Two LGFVs print dollars despite conditions
„„Bonds Issues draw support from anchors amid heightened volatility in global market
Two Chinese local government financing
vehicles braved the volatile market last
Wednesday to print US dollar bonds for a
combined US$500m, as anchor orders gave
bookrunners the confidence to proceed.
FUJIAN ZHANGLONG GROUP, based in
Zhangzhou in Fujian province and rated BB+
(Fitch), priced US$300m 5.60% three-year
notes at 99.321 to yield 5.85%, inside initial
guidance of 6.0% area.
Shangrao Investment Holding Group,
based in Shangrao in Jiangxi province, priced
US$200m 5.70% three-year notes at 98.116
to yield 6.40%, versus initial guidance of
6.5% area.
People familiar with the issues said both
were heavily anchored.
The transactions came amid heightened
volatility in global markets with stocks
tumbling and the 10-year US Treasury yield
spiking to a four-year high on expectation
of faster rate hikes in the US in reaction to
inflationary pressure.
“Anchor investors’ interest in the deal
was not affected by recent market volatility,
which gave us confidence to launch the
deal,” said a banker on the Zhanglong
issue.
However, he admitted that other investors
had become more cautious and picky, and
types, 34% were private banks, 33% were
asset managers, 32% were banks, and 1%
were corporations.
Orders for the five-year tranche came to
US$800m from 45 accounts. Asia took 88%
and Europe got 12%. In terms of investor
types, 53% were asset managers, 26% were
private banks, 10% were banks and 11%
were corporations.
Greenland Global Investment is the
issuer of the Reg S notes, while Greenland
Holding Group is the guarantor. The notes
have an expected Ba2 rating from Moody’s.
BOC International and China Citic Bank
International were joint global coordinators,
as well as joint bookrunners and joint lead
managers with China Chengtong and VTB Capital.
››RED STAR MACALLINE EYES US$700M
RED STAR MACALLINE GROUP, rated BBB/BBB
(S&P/Fitch), said its board had approved
the issuance up to US$700m of US dollar
notes, via wholly owned subsidiary Hong
Kong Red Star Macalline Universal Home
Furnishings.
had asked for more price concessions due to
the poor overall sentiment.
Zhanglong still has US$200m of offshore
debt issuance quota available after the latest
issue, according to another banker.
Shangrao Investment has used up its
entire US$500m quota after the latest
issue, as one of its subsidiaries, SHANGRAO
CITY CONSTRUCTION INVESTMENT DEVELOPMENT
GROUP, used part of it last December for
US$300m of three-year bonds priced at par
to yield 5.70%.
Shangrao’s 5.70% 2020s were quoted at
a cash price of 99.625/100.125 or a yield of
5.841%/5.650% in the secondary market late
Thursday morning, according to Tradeweb.
The notes have a BB+ rating from Fitch.
Based on this, both newly priced notes
from Zhanglong and Shangrao offered
higher yields.
Zhanglong’s new bonds were quoted at a
cash price of 98.875/99.375 late Thursday
morning, while Shangrao’s notes were
quoted at 97.75/98.25, according to a trader.
Zhanglong is involved in trading, water
supply, real estate and construction
businesses.
Its bonds were issued via wholly owned
unit Full Dragon (Hong Kong) International
Development and Zhanglong serves as
International Financing Review Asia February 10 2018 19
COUNTRY REPORT CHINA
The proposed notes would have a tenor
of no longer than 10 years, it said in a stock
exchange filing.
Proceeds from the issue, which needs
shareholder approval, will be used
to finance construction of projects,
investments or acquisitions in the home
furnishing-related areas, as well as
replenishment of working capital.
Last September, the operator of Chinese
shopping malls for home furnishings issued
US$300m of 3.375% five-year bonds at
99.413 to yield 3.504%.
››FANTASIA PRICES 364-DAY NOTES
FANTASIA HOLDINGS GROUP,rated B2/B+
(Moody’s/S&P), drew final orders of
US$1.1bn from 94 accounts for US$300m of
short-term US dollar senior bonds.
The Chinese property developer offered
the unrated 364-day Reg S notes at par
to yield 7.25%, well inside initial price
guidance of 7.5% area.
Proceeds will be used for debt repayment.
Asia took 99% of the notes and Europe
guarantor. The Reg S notes have an expected
rating of BB+ (Fitch).
Proceeds will be used for domestic debt
refinancing and project investments.
Shangrao has assets in infrastructure
construction, tourism, water supply and
waste-water treatment, state-owned asset
management and other businesses.
Wholly owned subsidiary Shangrao
Investment Holdings International is the issuer
of the Reg S unrated notes and Shangrao
Investment Holding Group is the guarantor.
Proceeds will be used to finance existing
projects, repay bank borrowings and meet
general corporate needs.
CEB International was sole global
coordinator on Zhanglong’s issue. It was also
joint bookrunner and joint lead manager
with Mizuho Securities, Bank of China, China
Industrial Securities International, Chiyu
Banking, Fortune (HK) Securities, Industrial
Bank, Hong Kong branch, SPDB International
and Wing Lung Bank.
SPDB International was sole global
coordinator on Shangrao Investment’s deal.
It was also joint bookrunner and joint lead
manager with Shanghai Pudong Development
Bank, Singapore branch, BOC International
and Orient Securities (Hong Kong).
CAROL CHAN
got 1%. In terms of investor types, a
combined 76% were fund managers and
asset managers, 10% were private banks, 8%
were insurers, and 6% were banks.
UBS, Guotai Junan International and Haitong
International were joint bookrunners.
››JUJIANG PLANS CORPORATE ISSUE
Chinese construction engineering company
JUJIANG CONSTRUCTION GROUP aims to issue
corporate bonds, with tenors of up to five
years, to raise up to US$200m.
The bonds will be issued in one or
multiple tranches in either public or
private offerings, according to a filing on
the Stock Exchange of Hong Kong.
The issuance is subject to shareholder
approval.
Proceeds are expected to be remitted
back to China to repay domestic bank loans
and for working capital.
››SUNSHINE 100 ADDS TO 2020 LINE
SUNSHINE 100 CHINA HOLDINGS has added
US$165m to its 8.50% US dollar senior notes
bonds due 2022, which were priced last
September.
The Hong Kong-listed Chinese property
developer sold the additional Reg S unrated
notes at 99.983 or a reoffer yield of 8.50%.
Proceeds will be used for debt
refinancing and general corporate
purposes.
Guotai Junan International, China Industrial
Securities International, Yue Xiu Securities,
Orient Securities (Hong Kong), CCB International
and Haitong International were joint global
coordinators, joint lead managers and joint
bookrunners.
With the latest tap, the size of the 2022s
went up to US$400m.
On December 18, Fitch placed Sunshine
100 China’s B– issuer rating on rating
watch negative. S&P has a CCC+ issuer
rating on the company.
››INDUSTRIAL BANK SETS UP MTN SCHEME
INDUSTRIAL BANK has set up a US$5bn medium-
term notes programme, with its Hong Kong
branch, Citigroup and Standard Chartered
Bank as arrangers and dealers.
The MTN programme is listed on the
Stock Exchange of Hong Kong.
Bank of American Merrill Lynch and BOC
International are also dealers on the
programme.
››SHANDONG HI-SPEED HIRES TWO
SHANDONG HI-SPEED GROUP, rated A3/A (Moody’s/
Fitch), hired Deutsche Bank, ICBC (Asia) and
BOC International as joint global coordinators
20 International Financing Review Asia February 10 2018
to arrange investor calls in Hong Kong,
starting February 5.
An offering of Reg S US dollar senior
bonds may follow, subject to market
conditions. An advisory from one of the
leads indicates that the issue is likely to
have a tenor of 363 days.
Coastal Emerald will be issuer of the
proposed notes, while China Shandong Hi-
Speed Financial Group will be guarantor
and Shandong Hi-Speed will provide a
keepwell and liquidity support deed.
Shandong Hi-Speed is a Chinese state-
owned transport and infrastructure
company.
››JCIG MULLS US DOLLAR ISSUE
JIANGYIN CHENGXING INDUSTRIAL GROUP,rated B
(Fitch), has hired ICBC (Asia) and Haitong
International as joint global coordinators
for a proposed offering of US dollar senior
unsecured notes.
The Chinese chemical producer held
investor meetings in Hong Kong and
conference calls with international
investors from February 5.
Wholly owned subsidiary Red Cloud
Capital will issue the notes and Jiangyin
Chengxing Industrial will be guarantor.
The Reg S notes also have an expected B
rating.
››SINOCHEM PRINTS DIM SUM NOTES
SINOCHEM HONG KONG (GROUP),rated A3/A–/A–,
has printed Rmb1bn (US$158m) three-year
Dim Sum bonds at par to yield 4.40%, flat to
final price guidance.
The offering attracted orders of over
Rmb2.2bn from 45 accounts. Asian
investors took 91% of the notes and
European investors 9%.
In terms of investor type, fund managers
were allocated 60% of the notes, banks 24%,
insurers 14% and private banks 2%.
Sinochem Offshore Capital is the issuer
and Sinochem Hong Kong the guarantor.
The issue is expected to score a A3
Moody’s rating.
Standard Chartered Bank was arranger and
lead manager.
››SINO-OCEAN PAYS UP FOR PANDAS
Property developer SINO-OCEAN GROUP HOLDING
has paid up on its second visit to the Panda
bond market in two weeks.
The Hong Kong-incorporated developer
priced Rmb3bn of three-year Pandas in
the interbank bond market at par to yield
5.95%.
On January 24, it printed Rmb3bn of
three-year Panda notes at par to yield 5.87%.
Market sources said the repeat issue,
within such a short time, was mainly to
blame for the higher yield on the second
offering.
The proceeds will be used for debt
repayment, capital replenishment, as
well as for development of commercial
properties.
Sino-Ocean, in which China Life
Insurance (Group) holds a 29.98% stake, is
a domestic AAA credit to China Chengxin.
Internationally, Sino-Ocean is rated Baa3/
BBB–(Moody’s/Fitch).
With the latest issue, Sino-Ocean
has used up its Rmb10bn Panda
bond programme registered with the
National Association of Financial Market
Institutional Investors.
China Citic Bank was lead underwriter and
bookrunner for the offering with ICBC as
joint lead underwriter.
››AIR LIQUIDE PLANS PANDA DEBUT
French industrial gases company AIR LIQUIDE
is planning to issue debut Panda bonds in
China as early as this month, according to
market sources.
It is looking to privately place a
Rmb2.2bn dual-tranche offering in the
interbank bond market. The tenors of the
notes are likely to be three years and five
years.
Air Liquide Finance will be the issuer
and Air Liquide will be the guarantor of the
notes, the sources said.
If the deal goes ahead, it will make
Air Liquide the second French issuer
to tap the Panda bond market after
water management company Veolia
Environnement, which raised Rmb1bn
from a private placement of three-year
Panda bonds in September 2016.
ICBC is lead underwriter on Air Liquide’s
offering. BNP Paribas (China), Bank of Tokyo-
Mitsubishi UFJ (China) and Crédit Agricole CIB
are financial advisers, according to the
sources.
Air Liquide previously tapped the
offshore renminbi bond market. Following
two Dim Sum note issues with total
principal of Rmb2.6bn in Hong Kong in
September 2011, the company printed
Rmb500m Formosa bonds in Taiwan in
January 2015. Proceeds were all used for
business in mainland China.
››GLP PRINTS RMB1.2BN PANDAS
Biggest Asian warehouse operator GLOBAL
LOGISTIC PROPERTIES has sold Rmb1.2bn of Belt
and Road Panda bonds on the Shenzhen
Stock Exchange.
The nine-year notes, which give investors
rights for a sell-back at the end of years three
and six, were priced at par to yield 5.65%.

Joyson to fund Takata buy
„„Loans Deutsche Bank and ICBC arranging two separate facilities
Deutsche Bank and Industrial and Commercial
Bank of China are arranging two separate
loans totalling US$1bn to help NINGBO JOYSON
ELECTRONICS fund its US$1.6bn purchase of
Japan’s Takata.
Both loans, likely to have five-year
maturities, are expected to be signed in the
next few weeks as the acquisition is expected
to be completed before the end of the first
quarter.
Joyson, a Shanghai-listed auto parts
supplier, signed a definitive asset-purchase
agreement with Takata on November 21 2017.
Takata will use the proceeds to
compensate automakers, injured people and
relatives of people, who died because of the
Japanese company’s defective airbags.
Takata filed for bankruptcy last June after
more than 100m of its airbags were recalled
because they could inflate explosively and
spray metal fragments.
The transaction still needs approval from
Takata’s creditors’ committee, courts in the
US and Japan, as well as regulators in the two
countries and China.
Joyson is acquiring Takata’s viable
The issuer did not fully exercise an over-
allotment option. It initially intended to
raise Rmb1bn from the offering with an
over-allotment option of Rmb5bn.
The proceeds will be used to repay debt
linked to GLP’s acquisition of logistics
assets in Europe.
The notes were issued in the name
of GLP subsidiary Iowa China Offshore
Holdings (Hong Kong).
Both GLP and the notes have AAA ratings
from Shanghai Brilliance Credit Rating.
China Merchants Securities was sole lead on
the offering.
With the new issue, GLP has sold notes
in three venues of China’s domestic bond
market.
In October 2017, GLP printed Rmb1bn
five-year notes in China’s interbank bond
market at par to yield 4.99%.
In July 2016, it launched debut Rmb1.5bn
Panda bonds on the Shanghai Stock
Exchange.
››LEGEND RAISES FIVE-YEAR FUNDS
LEGEND HOLDINGS,
the controlling shareholder
of computer maker Lenovo, has printed
Rmb1bn five-year notes at par to yield 6.0%
on the Shanghai Stock Exchange.
operations through Luxembourg-registered
Joyson KSS Auto Safety, which owns 100%
of Michigan-based parts supplier Key Safety
Systems.
The Chinese company acquired KSS in a
US$920m deal in 2016 and raised US$554m-
equivalent through a five-year term loan in
May that year to finance the acquisition. The
Ningbo branch of Bank of China and ICBC
were co-lead arrangers on the loan, split into
a Rmb2.983bn (US$454m then) tranche
A paying an interest margin of 100% of the
PBoC rate and a US$100m tranche B with a
margin of 150bp over three-month Libor.
Ningbo-based Joyson set up fully owned
subsidiary Joyson KSS Auto Safety Holdings
on November 17 2017 and plans to sell
a 15.15% stake for US$150m to Chinese
state-backed private equity SDIC Fund
Management. Joyson, meanwhile, will further
inject US$250m to hold an eventual 84.85%
stake in Joyson KSS Auto Safety Holdings,
which owns 100% of Joyson KSS Auto Safety,
according to a company stock filing on
January 3.
YAN JIANG
The proceeds are intended to repay bank
loans.
United Ratings sees both the issuer and
the notes as AAA.
China Galaxy Securities is sole lead on the
offering.
››CMP PRINTS RMB500M PANDA NOTES
Hong Kong-incorporated CHINA MERCHANTS
PORT HOLDINGS has raised Rmb500m from an
offering of Belt and Road Panda bonds on
the Shenzhen Stock Exchange.
The issuer priced the three-year notes at
par to yield 5.15%. Investors have the right
to sell them back at the end of years one
and two.
CMP intends to use the proceeds to pay
for a 99-year lease on Hambantota port in
Sri Lanka.
Sri Lanka signed a US$1.1bn deal last July
to lease its southern Hambantota port to
China Merchants Port Holdings. The port is
near the main shipping route from Asia to
Europe and likely to play a role in China’s
Belt and Road initiative.
China Merchants Securities was lead
underwriter on the offering.
China Chengxin has assigned ratings of
AAA to CMP and its notes.
International Financing Review Asia February 10 2018 21
COUNTRY REPORT CHINA
SYNDICATED LOANS
››BOCOM UNIT INCREASES LOAN SIZE
has
BANK OF COMMUNICATIONS FINANCIAL LEASING
signed a bigger-sized three-year onshore
loan of US$430m, following commitments
from six banks in general syndication.
Mandated lead arrangers and
bookrunners DBS Bank, HSBC, SMBC and
Westpac each committed US$75m. The four
launched the loan at a size of US$300m in
early November, offering a top-level all-in
pricing of 120bp, via an interest margin of
108bp over Libor and an average life of 2.76
years.
On November 14, the borrower signed
the US$300m loan with the four MLABs and
drew down later that month.
Six other banks joining in general
syndication were transferred into the
facility on January 15.
In China’s syndicated loan market,
banks are not allowed to sell down partial
commitments. They can either sell down
their entire exposure or hold on to it until
maturity.
BoCom Financial Leasing, rated A3/
A–/A, is a wholly owned unit of Bank of
Communications, China’s fifth-largest listed
bank in asset terms.
For full allocations, see www.ifrasia.com.
››HUARONG SHIFTS FOCUS ONSHORE
State-owned China Huarong Asset
Management is seeking a Rmb1bn
(US$159m) two-year term loan through a
subsidiary in its first syndicated borrowing
in the onshore market.
Hana Bank (China) is sole mandated lead
arranger and bookrunner on the loan, with
an average life of 1.8 years and paying an
interest margin of 118% of the PBoC rate.
The benchmark PBoC lending rate for
tenors longer than one year and up to five
years now stands at 4.75%.
MLAs with Rmb150m earn a top-level
all-in pricing of 121.51% of the PBoC
rate, via a participation fee of 30bp, lead
arrangers with Rmb100m–Rmb149m earn
an all-in of 120.34% of the PBoC rate, via a
20bp fee, while arrangers with Rmb50m–
Rmb99m earn an all-in of 119.17% of the
PBoC rate, via a 10bp fee.
HUARONG TIANZE INVESTMENT, a unit of
Huarong AMC, is borrower on the new
onshore amortising loan, while the parent
is guarantor.
Funds are for refinancing and working
capital. The deadline for commitments is
end-March.
The country’s biggest distressed-debt
manager was very active in the offshore
loan markets last year, borrowing US$1.9bn
in five deals through various units. The
loans carried short maturities of two years
or below, according to Thomson Reuters
LPC data.
These included a HK$3.8bn-equivalent
(US$485m) 364-day financing and a
HK$1.1bn one-year club loan signed in
November, a HK$2.72bn 364-day facility
in October, a US$800m 364-day borrowing
in August, and a US$110m two-year ship
funding in July.
››MINSHENG FL GOING SHIBOR AGAIN
MINSHENG FINANCIAL LEASING is raising a one-
year term loan of Rmb500m in what will
be China’s second syndicated facility to pay
interest based on the Shibor benchmark.
Hana Bank (China) is sole mandated lead
arranger and bookrunner on the new loan,
paying an interest margin of 80bp over one-
year Shibor.
MLAs with Rmb200m or more get a top-
level all-in pricing of 95bp over Shibor, via
a 15bp fee, lead arrangers with Rmb150m–
Rmb199m get an all-in pricing of 90bp over
Shibor, via a 10bp fee, and arrangers with
Rmb100m–Rmb149m get an all-in of 85bp,
via a 5bp fee. Commitments are due on or
before March 23.
Funds are for refinancing and working
capital.
This is the second Shibor-linked
syndicated loan in the onshore market
in less than six months. The first was in
October, when Merchants Union Consumer
Finance closed a Rmb1.15bn one-year loan,
paying a top-level all-in of 115bp over
Shibor, based on a margin of 100bp. Fubon
Bank (China) was sole MLAB and the loan
marked MUCF’s debut.
Minsheng Financial Leasing last tapped
the onshore market in September 2015 for
a US$150m two-year bullet from 10 banks,
including sole bookrunner Credit Suisse.
The loan received a strong response even
though the borrower revised the terms,
including a reduced size, and a cut to the
tenor and pricing.
That facility ended up offering a top-level
all-in of 200bp over Libor, based on an
interest margin of 165bp.
Its previous visit to the offshore market
was last December for a US$140m 6.5-year
ship financing. It was also in the market for
a US$164m pre-delivery payment facility in
October.
EQUITY CAPITAL MARKETS
››LY.COM PLANS HONG KONG IPO
LY.COM,
one of China’s largest travel booking
websites, aims to list in Hong Kong this
22 International Financing Review Asia February 10 2018
year to raise up to US$800m, according to
people close to the plans.
They say the company plans to bring the
IPO of US$600m–$800m to the market as
early as the second half of the year through
leads CMB International, JP Morgan and
Morgan Stanley.
LY.com attracted investments of more
than Rmb6bn (US$954m) in 2015 from
Wanda Culture Industry Group, the
entertainment arm of Dalian Wanda
Group, Tencent Industrial Capital, a unit of
Tencent Holdings, and Citic Capital. As the
lead investor, Wanda put in Rmb3.58bn.
In late 2016, LY.com merged with
Wanda Tourism, the travel arm of the
Chinese conglomerate. Commenting on
the merger, LY.com CEO Wu Zhixiang told
mainland media at the time the company
was forecast to post a 2018 net profit of
Rmb2bn on revenue of Rmb50bn.
››NEW PEAK WORKS ON US IPO
NEW PEAK GROUP, a Chinese online pharmacy
and health service platform, intends to
raise US$100m–$200m from a US IPO
this year, according to people close to the
plans.
New Peak mainly runs online drugstore
111.com.cn, which sells drugs and health-
related products, such as supplements. It
also runs a B2B online platform that allows
hospitals and pharmacies to buy drugs
directly from manufacturers. In addition,
it runs health service portal Yizhen, which
offers online doctor diagnosis to customers.
According to New Peak’s website, 111.
com.cn has 20 million registered users.
JP Morgan and Morgan Stanley are leads on
the float.
››A-LIVING SERVICES COMPLETES IPO
Developer Agile Group Holdings’ A-LIVING
SERVICES has raised HK$4.1bn (US$524m)
from an IPO priced slightly below the
midpoint of the indicative range.
The China-focused provider of property
management services sold 333.33m shares
at HK$12.30 each, off a HK$10.80–$14.20
range.
Agile will hold a stake of about 54%
in A-Living on completion of the IPO.
Proceeds will be used to fund investments,
acquisitions and upgrade operations.
Trading in the shares commenced on
February 9.
HSBC and Huatai Financial were joint
sponsors on the global offering, as well
as joint global coordinators and joint
bookrunners with Morgan Stanley. The other
bookrunners were ABC International, BNP
Paribas, CCB International, China Securities
International and ICBC International.
››GANFENG PLANS HK LISTING
GANFENG LITHIUM has applied for China
Securities Regulatory Commission approval
to issue H-shares of about US$1bn on the
main board of the Stock Exchange of Hong
Kong.
Citigroup is working on the transaction,
according to people familiar with the
situation.
The Shenzhen-listed lithium producer
plans to sell no more than 20% of its
enlarged capital, or about 185m H-shares,
based on its current total equity of
742m. The fundraising size may reach
Rmb10.87bn, based on the February 2 close
of Rmb58.78.
There is also a greenshoe option of 15%
of the base deal size.
Proceeds will be used for mergers
and acquisitions, output expansion, and
research and development, among other
things.
››HUAMI COMPLETES US LISTING
HUAMI, a maker of fitness trackers for
Chinese smartphone company Xiaomi, has
raised US$110m from a NYSE IPO.
The company sold 10m American
depositary shares at US$11 each, midpoint
of the indicative price range of US$10–$12.
The final price represents a 2018 P/E
of 14.7 and a 2019 P/E of 10.5. The top 10
investors took 80% of the shares.
Founded in 2014, Beijing-headquartered
Huami manufactures under the Mi brand for
Xiaomi and under its own Amazfit brand.
Pre-IPO investors included Xiaomi and
Shunwei Capital, a venture capital firm
that Xiaomi CEO Lei Jun co-founded. Prior
to the IPO, Xiaomi owned a 19.3% stake,
while Shunwei had 20.4%, according to the
prospectus.
Credit Suisse, Citigroup and China
Renaissance were joint bookrunners.
››JINKOSOLAR COMPLETES FOLLOW-ON
JINKOSOLAR, a Chinese maker of photovoltaic
cells, has raised US$65m from a follow-on
offering of 3.6m shares, priced at US$18.15
each, or a 10.8% discount to the February 6
close of US$20.35.
JinkoSolar shares fell 10.8% to US$18.16
on February 7.
There is a greenshoe of 15% of the base
deal size.
Concurrently, company chairman Xiande
Li and CEO Kangping Chen have agreed to
buy US$35m of shares through a private
placement.
The New York Stock Exchange-listed
company plans to use the proceeds for
general corporate purposes.

Barclays and Credit Suisse are the joint
bookrunners.
››GANSU LENDER EXERCISES GREENSHOE
BANK OF GANSU has exercised in full the
greenshoe option of its recent Hong Kong
IPO.
The north-western Chinese bank raised
an additional HK$893m from the sale of
332m shares at HK$2.69 each. Including the
greenshoe, the bank raised HK$6.84bn from
the IPO.
BOC International, CCB International, CMB
International, Guotai Junan International and
Huatai Financial were joint sponsors on the
float. The five banks were also joint global
coordinators and joint bookrunners with
Haitong International. ABC International, ICBC
International and CSR International were the
other joint bookrunners.
››BOYA PUTS OFF PRIVATE PLACEMENT
BOYA BIO-PHARMACEUTICAL GROUP has postponed
bookbuilding for a proposed private share
placement of up to Rmb1bn due to the
recent stock-market turmoil.
The ChiNext-listed producer of blood
products, which launched the placement
on February 5, decided to suspend the
offering three days later because of the
high volatility in the A-share market,
according to a company filing.
The Shanghai Composite Index fell 5.78%
in the first four days of last week, following
the massive sell-off in the US market on
February 5, when both the S&P 500 index
and the Dow Jones Industrial Average
suffered their biggest single-day percentage
drops since August 2011.
Boya said in the filing that it would
relaunch the placement at a proper time.
“Although the deal has temporarily
suspended, we are still confident to get it
done later,” said a source familiar with the
situation.
“Actually, we have seen enough demand
during soft marketing, but, under the
current market conditions, investors prefer
to wait until the stock market shows some
signs of stabilisation.”
Boya plans to offer not more than 37.50m
shares at a floor price to be set on the first
day of issuance. Proceeds will be used for a
production project.
Great Wall Securities has been named sole
bookrunner.
››KTK CONCLUDES SHANGHAI IPO
KTK GROUP has raised Rmb1.37bn from a
Shanghai IPO of 42m shares, or about 10%
of its enlarged capital, at Rmb32.69 each.
The IPO price was at a 52% discount to
the average valuation of listed peers in the
railway and other transport equipment
manufacturing industry.
The institutional tranche was about 565
times covered and the retail part 7,452
times covered before clawback. After
clawback, 90% of the shares were sold to
retail investors.
China Securities was the sponsor.
The manufacturer of railway equipment
plans to use the proceeds for the
production of railway equipment and for
working capital.
››JIANGSU LEASING COMPLETES IPO
JIANGSU FINANCIAL LEASINGhas raised Rmb4bn
from a Shanghai IPO of 640m shares, or
about 21.4% of its enlarged capital, at
Rmb6.25 each.
It ranks as only the second listed
financial-leasing company in the A-share
market and the first to complete an IPO,
opening a new source of funding for the
fast-growing, capital-intensive sector.
Bohai Capital, a unit of Chinese
conglomerate HNA Group, went public in
Shenzhen through a backdoor listing in
2011.
Jiangsu Leasing’s IPO price was at a 31%
discount to the average valuation of listed
peers in the leasing industry.
The institutional tranche was about 130
times covered and the retail part 1,375
times covered before clawback. After
clawback, 90% of the shares were sold to
retail investors.
Huatai United Securities was the sponsor
on the IPO, proceeds of which will be for
working capital.
››REGULATOR APPROVES FOUR FLOATS
The China Securities Regulatory
Commission has approved four applications
for listings to raise a combined Rmb5.1bn.
HUABAO FLAVOURS AND FRAGRANCES, the largest
of the four, is premarketing a ChiNext IPO
of about Rmb2.38bn, with Zheshang Securities
as sponsor.
The spin-off of Hong Kong-listed Huabao
International plans to offer not more than
61.59m shares, or about 10% of its enlarged
capital.
It will start bookbuilding on February 13.
Proceeds will be used for flavours
and food production projects, as well as
working capital.
CHINALIN SECURITIES cleared a CSRC hearing
for a proposed Shenzhen IPO of 270m
shares, or about 10% of its enlarged capital.
The Tibet-based brokerage may raise
about Rmb1.3bn from the IPO, based on its
2016 earnings per share of Rmb0.24 and
the one-month average valuation of 22.57
International Financing Review Asia February 10 2018 23
COUNTRY REPORT CHINA
times the historical earnings of the sector.
China Merchants Securities is the sponsor.
Proceeds will be used for working capital.
The float still needs written CSRC
approval.
››CSRC CLEARS THREE FOLLOW-ONS
HUANENG POWER INTERNATIONAL has cleared a
China Securities Regulatory Commission
hearing for a proposed private share
placement of up to Rmb5bn.
The power producer is looking to make
available not more than 800m A-shares at
a floor price to be set on the first day of
issuance.
Citic Securities is the sponsor. Proceeds will
be used to fund wind and thermal power
projects. The placement still needs written
CSRC approval.
TIANJIN CAPITAL ENVIRONMENTAL PROTECTION
GROUP has received written CSRC approval
for a proposed private placement of
A-shares of up to Rmb1.84bn.
The company, listed in Hong Kong and
Shanghai, plans to offer not more than
285m shares at a floor price to be set on the
first day of issuance.
Citic Securities is the sponsor. Proceeds will
be used for sewage-processing, as well as
energy-cooling and heating-supply, projects.
SHAANXI INTERNATIONAL TRUST has cleared a
CSRC hearing for a proposed rights issue of
up to Rmb3bn. The trust company plans to
offer up to 927m right shares on a 3-for-10
basis.
Largest shareholder Shaanxi Coal
and Chemical Industry Group, which
owns 34.58% of SIT, will take up its full
entitlement.
China Securities is the sole bookrunner.
Proceeds will be used for working capital.
The company still needs written CSRC
approval.
››CNPC COMPLETES RECORD EB ISSUE
CHINA NATIONAL PETROLEUM CORP has raised
Rmb20bn from a public offering of five-
year exchangeable bonds, the largest
such transaction in the Chinese domestic
market.
The securities can be exchanged for the
A-shares of PETROCHINA after 12 months.
Institutional investors bought 70% of the
securities and retail investors purchased the
rest. The retail tranche was about 31 times
covered, according to an exchange filing.
Being the first public EB issue of the year,
the oil giant set more investor-friendly
terms than for its initial outing last year,
in a sign that Chinese issuers have to work
harder to woo investors after a flood of
equity-linked offerings and an increase in
onshore bond yields.
 The coupon of the EB was set at the
bottom of the guidance range of 1.4%–2.0%.
The initial conversion price is Rmb9.38,
a premium of 0.9% to PetroChina’s pre-deal
spot. The initial conversion premium is the
lowest of any public EB issue since at least
the start of last year.
For comparison, CNPC priced its debut
Rmb10bn EB last July, with the same
underlying stock, at a coupon of 1%. The
initial conversion price was set at Rmb9,
a premium of 15.5% to PetroChina’s pre-
deal spot.
Both CNPC and its latest EB received AAA
ratings from China Chengxin.
China Securities, Goldman Sachs Gao Hua
Securities and CICC were joint leads on the
offering.
The three banks were also joint
bookrunners with China Galaxy Securities,
China Merchants Securities, Citic Securities and
BOC International (China).
Proceeds will be used for working capital.
››HAN'S LASER CB RAISES RMB2.3BN
has
HAN’S LASER TECHNOLOGY INDUSTRY GROUP
raised Rmb2.3bn from an offering of six-
year convertible bonds, with the public
tranche 511 times covered.
Existing shareholders took about 50.92%
of the CBs, while the rest went to retail
investors.
The coupon for the CB is 0.20% in year
one, stepping up to 2.00% in year six. The
initial conversion price is Rmb52.70, or a
premium of 7.6% to the pre-deal spot.
The unsecured bonds received a AA+
rating from Dagong Global.
The Chinese manufacturer will use the
proceeds for production projects.
Industrial Securities was the sponsor and
joint bookrunner with Goldman Sachs Gao
Hua Securities.
››TWO BANKS MULL CB OFFERINGS
BANK OF JIANGSU has obtained board approval
to sell six-year convertible bonds to raise up
to Rmb20bn, with Citic Securities and CICC as
joint sponsors..
Proceeds will be used to strengthen the
lender’s Core Tier 1 capital. The issue still
needs approval from shareholders and
regulators.
CHINA CITIC BANK shareholders have
agreed to extend the approval period for
a proposed issue of six-year CBs of up to
Rmb40bn. The approval will now expire on
February 6 2019.
The lender will use the proceeds to
strengthen its CT1 capital. Existing holders
of the company’s A-shares will have priority
to subscribe to the CBs.
The issue still needs regulatory approval.
››TWO FILE FOR EB ISSUES
ORIENT GROUP has applied for Shanghai Stock
Exchange approval for a proposed private
placement of three-year exchangeable
bonds in JINZHOU PORT to raise up to
Rmb1.2bn.
Shanghai-listed Orient, mainly engaged
in buying and selling grain and oil, holds
308m Jinzhou Port shares, or about 15.39%
of the company’s total issued capital.
Southwest Securities is the sole bookrunner.
Proceeds will be used to repay debt and for
working capital.
XIAMEN CONTEMPORARY CULTURE DEVELOPMENT
has applied for approval to the Shenzhen
Stock Exchange for a proposed private
placement of three-year EBs in CONTEMPORARY
EASTERN INVESTMENT to raise up to Rmb1.2bn.
Xiamen Contemporary holds 188m
Contemporary Eastern shares, representing
about 23.72% of the company’s total issued
capital.
First Capital Investment Banking is the sole
bookrunner.
Contemporary Eastern is mainly engaged
in the distribution of TV programmes.

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24 International Financing Review Asia February 10 2018


HONG KONG
DEBT CAPITAL MARKETS
››ZH INTERNATIONAL PLANS US$200M NOTES
ZH INTERNATIONAL HOLDINGSplans to raise
US$200m from the sale of US dollar short-
term notes to meet general corporate
needs.
The Reg S notes, with a coupon of 7.50%,
will be sold at par. The notes, expected to
be issued on February 12, will mature on
January 31 2019.
Ever Diamond Global, the controlling
shareholder of the Hong Kong-listed
company, will be the guarantor on the
notes. AMTD is the placing agent.
ZH International is a Hong Kong-based
investment holding firm involved in
security investment, property investment
and management, as well as hotels.
SYNDICATED LOANS
››ZHONGYU GAS DOUBLES LOAN SIZE
ZHONGYU GAS HOLDINGS has doubled a three-
year term loan to US$400m-equivalent from
the US$200m-equivalent target.
Bank of China (Hong Kong) was the
mandated lead arranger and bookrunner of
the financing, which comprises tranches of
US$236.5m and HK$1.2753bn (US$163m).
The loan pays an interest margin of
210bp over Libor or Hibor and has an
average life of 2.675 years. Banks were
invited to commit in either US or Hong
Kong dollars for an all-in pricing of 250bp,
based on an upfront fee of 107bp.
Funds are for refinancing and working
capital. Signing was on January 29.
The Hong Kong-listed borrower, a unit
of China Gas Holdings, builds and manages
gas pipelines and distributes natural gas in
China.
For full allocations, see www.ifrasia.com.
››AKBANK SEEKS ASIA BORROWING
AKBANK, rated Ba1/BB+ (Moody’s/Fitch), is in
the Asian market for a new loan through
three lead banks after having raised a
US$1.15bn-equivalent facility last August.
Bank of America Merrill Lynch, First Abu Dhabi
Bank and Industrial and Commercial Bank of
China are arranging the latest financing,
which will comprise a one-year US dollar
tranche A, a one-year euro tranche B and a
two-year US dollar tranche C.
The interest margins on tranches A and
C are expected to be 100bp and 180bp over
Libor, respectively, while tranche B will
offer a margin of 90bp over Euribor.
Last August, Akbank raised the
US$1.15bn-equivalent loan from 38 banks.
Emirates NBD Capital, ICBC Turkey
and Standard Chartered were the joint
coordinators and bookrunners of the
transaction, which comprised US$543m
and €515m tranches, of which US$945m-
equivalent is for one year and US$205m is
for two years. The one-year money offered a
total cost of 135bp over Libor for US dollar
drawings and 125bp over Euribor for euro
drawings, while the two-year money pays a
total cost of 220bp over Libor.
Akbank is one of the largest private-
sector lenders in Turkey.
››COGARD RESURFACES FOR HK$1.781BN
COUNTRY GARDEN HOLDINGS has launched a
HK$1.781bn three-year term loan, barely
four months after the real-estate developer
signed a US$1.25bn facility.
BNP Paribas is mandated lead arranger
and bookrunner on the latest financing,
which pays an interest margin of 230bp
over Hibor and has a 2.5-year average life.
MLAs joining with HK$200m or more
get an all-in pricing of 290bp over Hibor,
via a 150bp participation fee, while
lead arrangers with HK$160m–$199m
get an all-in of 284bp, via a 135bp fee,
and arrangers with HK$80m–$159m get
an all-in of 278bp, via a 120bp fee. The
deadline for commitments is March 8.
Funds are for the acquisition of a 15%
stake in real-estate services provider
E-House (China) Enterprise Holding. The
target’s shares will be pledged as part of the
security package.
Last October, CoGard raised a
US$1.249bn-equivalent four-year loan from
15 lenders. Bank of China (Hong Kong),
China Construction Bank, Hong Kong, Hang
Seng Bank, HSBC, ICBC (Asia), Shanghai
Pudong Development Bank, Hong Kong and
Standard Chartered were MLABs on that
loan, denominated in US and HK dollars.
Based on a margin of 249bp over Libor or
Hibor and a 3.75-year average life, banks
were offered a top-level all-in of 300bp via
a 191bp fee.
››IT CLUBS HK$800M BORROWING
Fashion apparel and accessories retailer IT
has signed with four banks a four-year club
loan of HK$800m.
BNP Paribas, CTBC Bank, Hang Seng Bank
and MUFG committed HK$200m each.
The amortising loan, which has semi-
annual repayments starting after an 18-
month grace period, paid an all-in pricing
International Financing Review Asia February 10 2018 25
COUNTRY REPORT HONG KONG
in the high 100s over Hibor.
IT FINANCE is the borrower, while Hong
Kong-listed IT and three indirectly wholly
owned subsidiaries are guarantors, the
company says in a stock filing on January
31, the day of signing.
Funds will refinance a Rmb894m
(US$142m) 6.25% five-year bond due on
May 15 2018 and also fund working capital
requirements.
››UA FINANCE OPTS FOR MORE
UNITED ASIA FINANCE has increased its four-year
loan to HK$850m from HK$800m originally
after commitments from three banks.
Mandated lead arrangers and
bookrunners Taipei Fubon Commercial Bank
and Taishin International Bank launched the
dual-tranche loan in early January at a top-
level all-in pricing of 222.9bp, based on an
interest margin of 200bp over Hibor and a
blended average life of 3.5 years.
Funds are for refinancing and working
capital purposes. Signing was scheduled to
take place last Thursday.
The latest borrowing follows a HK$1.6bn
four-year facility UA Finance closed in
February 2017. That loan paid a top-level
all-in of 245bp, based on a margin of 215bp
over Hibor and an average life of three
years, according to Thomson Reuters LPC
data.
For full allocations, see www.ifrasia.com.
INDIA
DEBT CAPITAL MARKETS
››RAJASTHAN POWER TRIO PLANS BONDS
Three Rajasthan state-owned power
companies aim to raise up to Rs122bn
(US$1.9bn) combined from rupee bonds and
have sent requests for proposals to bankers,
according to a source.
Care has assigned A+ (structured
obligation, stable) ratings to the long-
term bonds of Rs40.13bn, Rs41.63bn and
Rs40.3bn of JAIPUR VIDYUT VITRAN NIGAM, AJMER
VIDYUT VITRAN NIGAM and JODHPUR VIDYUT VITRAN
NIGAM, respectively.
The notes will have credit enhancement
in the form of a guarantee from the state
government. There will be a trustee-
monitored escrow account and structured
payment mechanism, whereby half a
year’s total debt-repayment obligation will
be maintained in a debt-service-reserve
account.
Last December, UTTAR PRADESH POWER CORP

RBI sparks rupee issuance
„„Bonds Yields fall after policy meeting cools inflation fears
Indian state-owned issuers are lining up to
issue rupee bonds after the Reserve Bank
of India kept policy rates unchanged and
retained its neutral stance.
RURAL ELECTRIFICATION CORP asked investors
last Friday to place bids for bonds, maturing
on March 2021, to raise Rs5bn (US$77.7m),
plus an undisclosed greenshoe.
A day earlier, POWER FINANCE CORP sold a two-
tranche bond at 7.73% each to raise Rs18.3bn.
The tranches mature in March 2021 and April
2021, respectively.
Public-sector companies are returning
to the market to sell bonds after the policy
annoucement eased bond yields.
The yield on India’s 10-year government
securities fell to 7.46% on Friday afternoon
after rising to a 17-month high of 7.61% earlier
in the week on concerns of a hawkish policy
statement and following a higher borrowing
programme in the 2018/19 budget. The yield
on 10-year AAA corporate bonds narrowed
5bp to 8.1% after the policy statement.
The RBI kept the repo rate unchanged at
6% last Wednesday, in line with expectations,
while also softening its inflation forecast for
the second half of FY18 to 4.5%-4.6%, even
raised Rs30.26bn from nine series of rupee
bonds of two to 10 years at 9.75% with credit
enhancement and a government guarantee.
UPPC is the holding company for
Uttar Pradesh’s five power-distribution
companies, or discoms.
››SREI INFRA READIES PUBLIC ISSUE
SREI INFRASTRUCTURE FINANCEis targeting a
public issue of bonds to raise up to Rs20bn,
according to an offer document.
The infrastructure financier aims to
raise Rs2bn, plus greenshoe amount of up
to Rs15bn, from a secured piece and up to
Rs5bn from a subordinated portion.
It has fixed the coupons at 8.50% for a
400-day issue, 8.75% for a three-year piece
and 9.00% for a five-year portion. It has also
fixed the price for 10-year subordinated
notes at 9.50%.
All tranches have monthly, annual and
cumulative coupon options, except for the
400-day tenor, which only has an annual
and cumulative coupon option.
Senior citizens, existing bondholders
and shareholders of the company will get
additional coupon incentive of 0.25% each.
Brickwork has assigned a AA+ rating to
the notes.
26 International Financing Review Asia February 10 2018
after oil and food prices pushed the consumer
price index to a 17-month high of 5.21% in
December. The RBI appeared mindful that a
premature tightening could dent an economy
seeing only a tentative recovery after growing
at the slowest pace in about three years.
“The market was slightly circumspect in
light of fiscal slippage and was expecting a
stern stance. In contrast, the RBI came with
status quo accompanied by a milder stance.
This came as a sigh of relief for an excessively
bearish market,” said Lakshmi Iyer, chief
investment officer of debt and head of
products at Kotak Mutual Fund.
Investors hope the RBI will increase the
foreign portfolio investment limit for bonds in
the coming days.
“We believe any developments around
a potential revision to the foreign portfolio
investor framework and the RBI’s open-
market operation buybacks (which are more
likely in the second half of FY19) should be
keenly watched,” said Nomura in a February
7 note.
PFC and REC have yet to announce
officially their bond offerings.
KRISHNA MERCHANT
The issue, which opened last Friday,
closes on March 7.
SPA Securities is the lead manager on the
issue.
››ADANI INFRA SELLS ZERO COUPON NOTES
ADANI INFRA has sold Rs10bn of zero coupon
bonds due in April 2019, according to a
National Securities Depository filing.
The redemption premium for the notes is
fixed at 9.25%. There is a put/call option on
January 21 2019.
Brickwork has assigned a AA– (structured
obligation) rating to the senior secured
notes.
Earlier this month, Adani Infra raised
Rs5bn from zero coupon bonds due in April
2020.
››NABARD RAISES 15-YEAR FUNDS
NATIONAL BANK FOR AGRICULTURE AND RURAL
DEVELOPMENT (Nabard) has raised Rs8.64bn
from 15-year bonds priced at 8.19%,
according to a National Securities
Depository filing.
Two week ago, Nabard sold Rs1.35bn
of 15-year government of India-serviced
bonds at 7.99%, payable semi-annually. The
government will pay the interest on the
bonds.
Crisil and India Ratings have both see the
bonds as AAA.
Separately, pipe manufacturer WELSPUN
raised Rs2.5bn from six-year rupee bonds
at 8.9%.
The notes have AA– ratings from both
Crisil and Care.
EQUITY CAPITAL MARKETS
››VATIKA INVITES BIDS FOR RS6BN IPO
has invited bids from
VATIKA HOSPITALITY
banks to manage its Rs5bn–Rs6bn
(US$78m–$94m) IPO planned for later this
year, according to people with knowledge
of the process.
The domestic IPO is likely to be a
combination of primary and secondary
shares.
The funds from the IPO will be used to
expand the hotel business.
The company owns The Westin at
Gurugram and The Westin resort at Sohna.
It also owns restaurants like Coriander Leaf,
56Italiano, 56Fresca and Nukkadwala.
INDONESIA
DEBT CAPITAL MARKETS
››PANIN PLANS FIVE-YEAR RUPIAH ISSUE
PANIN BANK intends to issue Rp3.9trn
(US$285m) five-year rupiah bonds at
7.6% with the help of five lead arrangers,
according to a source close to the plans.
The five the Indonesian bank has
appointed are Danareksa, Indo Premier,
Evergreen, RHB and Trimegah Sekuritas.
The issue opens on February 21 and
closes the next day.
Pefindo has assigned a AA rating to the
notes, the proceeds of which will be used
for working capital.
››PEGADAIAN PLANS TRIPLE-TRANCHER
State-owned auction house PEGADAIAN plans
to sell Rp3.5trn of rupiah bonds in three
tranches, according to the offer document.
The Indonesian issuer has put out
indicative price ranges of 5.6%–6.15% for a
370-day tranche, 6.5%–7.25% for a three-year
piece, and 7.0%–7.5% for a five-year portion.
Bookbuilding, which began on February
7, will close on February 20. The pay-in will
take place on March 15.

Pegadaian has appointed Bahana, BNI,
Danareksa and Mandiri Sekuritas as lead
arrangers.
The funds will be used for refinancing of
bank loans.
Pefindo has assigned a AAA rating to the
secured bonds.
››EXIMBANK SELLS THREE-TRANCHER
INDONESIA EXIMBANK has sold Rp2.46trn of
three-tranche rupiah bonds, according to a
source close to the transaction.
The bank raised Rp610bn from a three-year
at 6.35%, Rp1.65trn from a five-year at 6.7%
and Rp206bn from a seven-year at 6.9%.
Danareksa, DBS Vickers, CIMB and Indo
Premier were lead arrangers on the issue,
which has a AAA Pefindo rating.
Indonesia Eximbank has yet to announce
the issue officially.
››BRI RAISES TWO-TRANCHE FUNDS
BANK RAKYAT INDONESIA has raised Rp2.4trn
from dual-tranche bonds, according to a
source close to the sale.
The Indonesian state lender issued a
Rp1.77trn five-year portion at 6.65% and a
Rp677bn seven-year piece at 6.9%.
Bahana Securities, BCA Sekuritas, Danareksa
Sekuritas, DBS Vickers Securities and Indo
Premier Securities were lead arrangers.
Pefindo rates the bonds AAA.
BRI plans to issue Rp12trn–Rp15trn
of bonds under a three-year programme
starting in the second half of 2018, with a
Rp5trn target for this year, Reuters reported
last month, citing CFO Haru Koesmahargyo.
BRI also plans to issue Rp5trn of bonds
this year off an existing programme, he
said.
››ADIRA TARGETS RP1.5TRN VIA BONDS
ADIRA FINANCEaims to raise Rp1.5trn from
five-tranche bonds with rupiah and sukuk
portions, according to an offer document.
The Indonesian consumer finance firm
has put out indicative price ranges of
5.85%–6.25% for rupiah bonds of 370 days,
6.25%–6.75% for those of two years, 6.95%–
7.45% for those of three years, 7.00%–7.50%
for those of four years and 7.05%–7.55% for
those seven years to raise Rp1.3trn. The
remainder will come from Islamic paper
with similar maturities and prices.
Bookbuilding began on February 8 and
will close on February 23.
Mandiri, DBS Vickers, RHB, Indo Premier
Sekuritas and Trimegah Sekuritas are lead
arrangers for the issue, rated AAA (Pefindo).
The funds will be used for consumer
financing activities.
SYNDICATED LOANS
››TIPHONE LAUNCHES US$186M LOAN
TIPHONE MOBILE INDONESIAhas launched a
US$186m-equivalent three-year loan
through mandated lead arrangers and
bookrunners Bank Central Asia, Bank CIMB
Niaga and Standard Chartered.
The loan is split into tranches of
Rp1.25trn (US$92m) and US$94m.
The interest margin is 300bp over Jibor
for the onshore portion and 200bp over
Libor for the offshore piece.
Based on a 2.75-year remaining life and
an early-bird fee of 5bp, lenders can join
the offshore tranche for a top-level all-in
pricing of 218.2bp and the lead arranger
title, through a 45bp management fee, for
US$20m or more, or an all-in pricing of
212.7bp and the arranger title, via a 30bp
fee, for US$10m–$19m.
The deadline to commit for the early-bird
fee is February 21.
Poor response to Vedanta refi
„„Loans Five-year facility of US$575m attracts just two banks in general syndication
A five-year amortising loan of US$575m for
London-listed VEDANTA RESOURCES met with a
poor response before closing in December
after just two banks joined in general
syndication.
Federal Bank and Punjab National Bank
were the lenders, with a combined US$80m,
in general syndication, meaning mandated
lead arrangers, bookrunners and underwriters
Barclays, Credit Suisse, DBS Bank, First Abu
Dhabi Bank and Standard Chartered took
US$99m each.
The outcome was not surprising due to
the timing of the loan, which was signed in
December after having been launched into
syndication in mid-September. It followed a
US$651m four-tranche loan for Cairn India
Holdings, which merged with Vedanta last
year.
Cairn India’s loan refinanced all debt
at Vedanta wholly owned unit Twin Star
Holdings, also the borrower on the latest
borrowing.
The US$651m four-tranche loan for Cairn
India comprises a US$155.125m three-year
facility A, a US$93m five-year facility B, a
US$309.875m five-year facility C and a
US$93m five-year facility D. Only facilities
A and C were syndicated to foreign lenders,
while Indian banks took up tranches B and D.
Seven banks joined tranches A and C, while
one Indian lender came forward for tranches
International Financing Review Asia February 10 2018 27
COUNTRY REPORT INDONESIA
Funds are for refinancing purposes.
The borrower last tapped the loan
market with a US$184m-equivalent three-
year revolving credit facility in December
2015. BCA, CIMB, HSBC and StanChart
were the MLABs on that loan, comprising
a Rp1.875trn tranche and a Rp625bn-
equivalent tranche in US dollars. Based
on a 2.75-year remaining life, the all-in
pricing was 241.8bp (onshore) and 221.8bp
(offshore) via margins of 220bp and 200bp,
respectively.
The Jakarta-listed borrower sells mobile
phones, SIM cards, accessories, spare parts
and offers phone repair services.
››INDORENT WORKS ON US$100M LOAN
Car rental company CSM CORPORATAMA,
also known as Indorent, is about to
launch a US$100m financing into general
syndication with six banks at the top.
ANZ, CIMB, CTBC Bank, DBS, Standard
Chartered and SMBC are mandated
B and D. Axis, Barclays, Citigroup, Credit
Suisse, First Abu Dhabi Bank, ICICI Bank and
StanChart were the MLABs on the entire
financing.
Interestingly, Barclays and Credit Suisse
ended up with zero final holds, a rarity in
Asia syndicated loans. Axis Bank and ICICI
underwrote tranches B and D.
Banks joining both facilities A and C as
MLAs on a pro-rata basis were offered a
blended top-level all-in of 233.4bp. The
blended interest margin is 205bp and the
blended remaining average life is 3.17 years.
On the other hand, Vedanta’s US$575m
loan did not attract lenders, despite offering
a richer top-level all-in of 345.46bp based on
a margin of 310bp over Libor and a remaining
average life of 4.23 years.
Vedanta’s loan complemented US$1bn of
seven-year non-call four senior unsecured
bonds it completed in early August. The
bonds were priced at 6.125%, inside initial
guidance of 6.375%. The five leads on the
loan, along with JP Morgan, were joint global
coordinators, joint lead managers and joint
bookrunners on the bonds.
Proceeds from the loan and the bonds were
used to refinance debt, including a tender
offer Vedanta announced in late July for two
outstanding bonds – US$774.8m of 6.0%
2019s and US$900m of 8.25% 2021s.
PRAKASH CHAKRAVARTI, CHIEN MI WONG
 Tax change to spur Indian ECM activity
„„Equities New capital gains tax seen speeding up disposals of stakes through IPOs and block trades
Promoters and private-equity investors are
expected to speed up plans to sell stakes
through IPOs and block trades with the new
10% long capital gains tax to kick in on April 1.
The LCGT, proposed in the federal budget,
will require any investor selling shares in the
stock market to pay tax on the difference
between the issue price and the net asset
value of the company on January 31 2018.
Bankers say that will give major investors
an incentive to sell sooner rather than later.
But the rules are also likely to raise valuation
expectations as the exit prices will have to
compensate for the new tax.
“Promoters waiting for better valuations
will give in as the new tax will eat into their
gains after April,” said a Mumbai-based ECM
banker. “We’re just hoping the markets will
be back in positive territory after the recent
sell-off.”
lead arrangers and bookrunners on
the facility, which has an unspecified
greenshoe option.
A preliminary invitation has been sent
to participants for a roadshow to be held
in Singapore on February 7. The tenor and
pricing terms have yet to be released.
Funds will be used for refinancing and
general corporate purposes.
The borrower last completed a US$100m
three-year loan in January 2016. CTBC, DBS,
StanChart and SMBC were lenders. The
loan, which attracted six others in general
syndication, offered a top-level all-in prices
of 305.68bp or 275.68bp for the offshore
and onshore tranches, based on margins of
280bp and 250bp over Libor, respectively.
The average life is 2.29 years.
Indorent, an affiliate of Indomobil
Finance Indonesia, provides vehicle and
heavy-duty equipment financing services.
Indorent and Indomobil Finance are units
of Indomobil Multi Jasa, which under the
control of conglomerate Salim Group.
JAPAN
SYNDICATED LOANS
››TOEI REEFER MBO BACK ON TABLE
TOEI REEFER LINE’s
management buyout is back
in the limelight after a revised bid from
28 International Financing Review Asia February 10 2018
Since the budget on February 1, the
benchmark S&P BSE Sensex Index has lost
some of its lustre. For the month to last
Thursday, it was down 5.7% as the budget and
the global share volatility heightened selling.
In the past, there was no LCGT on stock-
market exits. However, exits in the private
market attracted a 20% LCGT for resident
investors and 10% for foreigners.
Bankers see a booming public market as
the best option for promoters and PE players
to monetise their assets.
Equity issues from Indian companies
totalled US$25bn in 2017, versus US$9.2bn
in 2016, according to Thomson Reuters data.
IPOs raised US$11.1bn, up 176% year on year
and the highest since 2007.
A majority of these IPOs involved stake
sales from controlling shareholders. For
example, the IPOs of close to US$1bn and
its president, who failed in an attempt last
month.
KK Ocean, president Hirofumi Kawai’s
special-purpose company, reached an
agreement with Toei Reefer Line’s top
shareholders Reno and Office Support,
investment funds related to Japanese
activist investor Yoshiaki Murakami, with
a revised offer of ¥800 (US$7.34) per share,
up from the earlier ¥600.
The revised offer for Jasdaq-listed Toei
Reefer Line would be launched on Thursday
and end on March 23, the frozen tuna
shipping company said on Wednesday.
MUFJ had committed a five-year senior
loan of ¥7.2bn to back the MBO before
increasing it to ¥9.3bn.
Tokio Marine Mezzanine also doubled its
mezzanine investment in preferred stock to
¥2bn from ¥1bn.
Last month, Kawai withdrew his bid for
Toei Reefer Line after failing to buy the
minimum 3,689,400 shares, or 66.7% of
the company, required for the purchase
to proceed. He ended up with 2,520,429
shares, or a 45.5% stake.
Since the announcement of the MBO in
early November, the investment funds had
increased their stakes in Toei Reefer Line to
16.7%, according to their January 15 filing
to the Tokyo Stock Exchange.
››SKYLARK GETS ¥107BN FOR REFINANCING
Tokyo Stock Exchange-listed restaurant
chain operator SKYLARK signed a ¥107bn
amortising term loan for refinancing.
above each of ICICI Lombard, SBI Life
Insurance and HDFC Standard Life Insurance
comprised only secondary shares. The IPOs
of over US$1bn each of General Insurance
Corp of India and New India Assurance had
only a small primary component.
“Promoters and PEs have had it so good
that it was only natural someone would tax
them,” said another ECM banker.
For now, the Indian IPO pipeline looks good
and the market is awaiting the floats of ICICI
Securities, Bandhan Bank, Reliance General
Insurance, Lemon Tree Hotels and Sandhar
Technologies in the first quarter. The Rs45bn
(US$700m) ICICI Securities and Rs13bn
Lemon Tree IPOs comprise only secondary
components, while those of Bandhan, Sandhar
and Reliance General involve a mix of primary
and secondary shares.
S ANURADHA
The loan, signed on February 2, is split
into an ¥8bn tranche A, maturing on
December 31 2024, and a ¥99bn tranche B,
due on December 31 2027.
Tranche A will be repaid in 10 semi-
annual instalments of ¥411m each, with
a balloon payment of ¥3.89bn to follow,
while tranche B will be repaid in 16 semi-
annual instalments of ¥5.089bn apiece,
with a balloon payment of ¥17.576bn
to follow. The first instalment on both
tranches is on December 31 2019.
Mizuho Bank was the arranger and agent,
MUFG and SMBC came in as co-arrangers,
while Development Bank of Japan, Norinchukin
Bank and Sumitomo Mitsui Trust Bank joined
as lenders.
Skylark Restaurants, a unit of Skylark, is
the guarantor.
Financial covenants are net assets must
be maintained at a minimum of 75% of the
highest amount of net assets as shown on the
consolidated balance sheet as at December
31 for the fiscal years 2016, 2017 or 2018; the
borrower must not record loss in its financial
statements for two consecutive fiscal years;
and the net leverage ratio should be less than
or equal to: 4.00x for every quarter from April
1 2019 to March 31 2021, 3.75x for every
quarter from April 1 2021 to March 31 2023,
3.50x for every quarter from April 1 2023 to
March 31 2025, 3.25x for every quarter from
April 1 2025 to March 31 2027, and 3.00x for
every quarter from April 1 2027.
Funds are to refinance a ¥107.1bn loan
due on June 24 2019.
Skylark, which, as of December 31,

operated 3,144 restaurants worldwide
last tapped the syndicated loan market
in February 2017 for a ¥30bn three-
year amortising term loan for capital
expenditure.
››CRE LOGISTICS RAISES ¥12.37BN
CRE LOGISTICS REITsigned a ¥12.37bn bullet
term loan last Monday for property
acquisitions.
The loan comprises a ¥3.68bn four-year
tranche, with an interest margin of 40bp
over three-month Tibor, a ¥3.68bn five-year
tranche, with a margin of 45bp over three-
month Tibor, a ¥3.68bn six-year tranche,
with a margin of 50bp over three-month
Tibor, and a ¥1.33bn one-year tranche, with
a margin of 35bp over one-month Tibor.
SMBC was the mandated lead arranger,
Mizuho Bank and MUFG came in as co-
arrangers, while Development Bank of Japan,
Nishi-Nippon City Bank and Resona Bank joined
as lenders.
Funds, drawn last Wednesday, are to buy
four logistics facilities.
The REIT, which invests solely in
logistics facilities, was listed on the TSE last
Wednesday.
EQUITY CAPITAL MARKETS
››SOFTBANK SET TO LIST MOBILE UNIT
Japanese conglomerate SOFTBANK GROUP has
started preparations to list mobile phone
unit SOFTBANK CORP.
China Eastern adds Japanese debt route
„„Bonds Chinese carrier to offer unfamiliar structures in yen debut
CHINA EASTERN AIRLINES will give Japanese
investors a taste of unfamiliar bond
structures as it makes its yen market debut.
The Chinese state-owned carrier spent
three days briefing investors last week for
a three-pronged offering, including bank
guarantees and standby letters of credit.
One piece will carry a guarantee from
Sumitomo Mitsui Banking Corp, Hong Kong
branch, and have an expected rating of
AA from JCR. SMBC Nikko is a sole global
coordinator and joint bookrunner, while DBJ
Securities is a joint bookrunner.
Two other pieces will have standby letters of
credit from Bank of China, Tokyo branch, and
Industrial Commercial Bank of China, Shanghai
Municipal branch, respectively. Both bonds
have expected ratings of A1 from Moody’s.
SoftBank Group CEO Masayoshi Son
told reporters last week that the company
wanted to list the unit this year.
According to last Wednesday’s press
release from SoftBank Group, the company
is currently accelerating its global
investment activities through the SoftBank
Vision Fund and other vehicles to drive
overall growth.
With the proposed spin-off, the
respective roles and valuations of the
group company and the mobile unit will be
clear, making it possible to communicate
information on the group’s businesses to
the market with greater clarity.
SoftBank Corp will remain a major
consolidated subsidiary of the SoftBank
Group’s telecommunications business, even
after being listed, according to the press
release.
Last month, SoftBank Group was
reportedly planning to list its mobile
phone unit in Tokyo and overseas,
possibly London, to raise as much as ¥2trn
(US$18bn).
››GLP J-REIT LAUNCHES FOLLOW-ON
has launched a global offering
GLP J-REIT
of new investment units to raise up to
¥70.4bn, based on the company’s closing
price of ¥124,800 last Monday, according to
a deal term-sheet.
The base deal comprises 524,804 units,
while there is an over-allotment option
of up to 39,361 units. The over-allotment
option represents 7.5% of the base size.
Half of the offer is being offered to
BoC, Mizuho and SMBC Nikko are joint
global coordinators and joint bookrunners on
the latter two structures, with Daiwa, Morgan
Stanley and Nomura as joint bookrunners.
The issuer is not expected to come quickly
to market after last week’s roadshow, so as
to give some time for Japanese investors to
familiarise themselves with the structures.
Although the proposed features are quite
common in China, they are not in Japan –
especially the SBLC – and investors need to
secure internal approvals first.
“China Eastern Airlines does not have
credit ratings, but can become an investment
target as the standby letter of credit is used
for credit enhancement, but, because this is
a bit different from a guarantee and because
investors didn’t anticipate something
International Financing Review Asia February 10 2018 29
COUNTRY REPORT MALAYSIA
international investors, while the other
50% is going to domestic buyers. Of the
domestic tranche, 25% is earmarked for
institutional investors, while the rest is for
retail buyers.
The units are marketed at a discount of
2.0%–4.5% to the market prices. The units
will price on any day between February 14
and February 20.
There is a 90-day lock-up period for the
issuer and a 180-day lock-up spell for GLP
Capital.
Books for the international offering opened
last Thursday and will close on February 13.
The company will use the proceeds
mainly as part payment towards the
purchase of six logistics properties and
the solar panels installed at 13 existing
properties.
Citigroup, Mizuho, Nomura and SMBC Nikko
are the joint global coordinators. The four
banks are also joint bookrunners on the
international offering.
MALAYSIA
DEBT CAPITAL MARKETS
››DANAINFRA SELLS M$4BN SUKUK
State-owned DANAINFRA NASIONAL sold M$4bn
(US$1.03bn) of Islamic bonds in a multi-
tranche transaction last week through five
joint lead managers.
like this, they apparently need internal
approvals,” said a banker on the deal.
As the structures are also new to Japanese
bankers, they are not fully certain if the
schemes will be well received. However, at
the same time, they hope that there will be
more yen issuance from Chinese borrowers,
even ones with lower credit ratings, if
Japanese investors become familiar with such
schemes.
CEA filed information on the programme
to the Tokyo Pro-bond market on February 2,
registering to issue up to ¥50bn (US$456m).
The bonds will be marketed under the pot
system, not the traditional retention system,
and are likely to have short maturities. The
pricing date is not set yet.
TAKAHIRO OKAMOTO
 A total of M$3bn of long-dated notes was
privately placed to institutional investors
while the remaining M$1bn in shorter
tenors was sold via a bookbuilding exercise.
The private placement on Tuesday saw
pricing on the M$1.5bn 20-year piece fixed
at 5.11%, that on the M$1bn 25-year tranche
at 5.24% and that on the M$500m 30-year
portion at 5.36%.
On Wednesday, pricing on the M$700m
seven-year piece was fixed at 4.37%, while
that on the M$500m 15-year was fixed
at 4.90%. A 10-year tranche was scrapped
because investors dropped out after
DanaInfra revised price guidance to 4.50%.
The seven-year tranche, however, proved
to be a sweet spot, drawing a book of over
M$2.5bn even after pricing was tightened.
Pricing was at a spread of 44bp over
Malaysian government securities.
Initial price talk on the three tranches
was 4.33%–4.43%, 4.50%–4.60% and 4.82%–
4.92%, respectively.
All the Islamic bonds carry an irrevocable
and unconditional guarantee from the
federal government of Malaysia.
DanaInfra, the government’s funding
vehicle for mass transport projects, will
settle the bonds on February 21, off a
M$46bn sukuk murabahah programme.
The five JLMs were AmInvestment Bank,
CIMB, HSBC Amanah Malaysia, Maybank and
RHB.
NEW ZEALAND
SYNDICATED LOANS
››FLETCHER BUILDING EXPECTS BREACH
FLETCHER BUILDING is reviewing key projects
of its building and interiors division as it
expects to post losses on breaches of one or
more of its loan covenants.
“Once the extent of those further losses
is determined and provided for, it is
expected that this would result in a breach
of one or more covenants in the group’s
financing arrangements,” the New Zealand
construction company said in a statement.
Last October, Fletcher had flagged a
full-year loss of NZ$160m (US$116m) at
the troubled unit due to difficulties in
the construction of projects, such as the
Convention Centre and Justice Precinct in
Christchurch.
Fletcher has requested a trading halt
of its shares until Monday, when further
details of the review will be released. It has
outstanding syndicated loans of NZ$725m,
with maturities in November 2020 and
30 International Financing Review Asia February 10 2018
November 2022, according to Thomson
Reuters LPC data.
The lenders are ANZ, Bank of New Zealand,
Bank of China, China Construction Bank,
Citigroup, CBA, HSBC, MUFG and Westpac.
PHILIPPINES
EQUITY CAPITAL MARKETS
››DEL MONTE PHILIPPINES PLANS IPO
Food and beverage company Del Monte
Pacific plans to list unit DEL MONTE PHILIPPINES
on the Philippine Stock Exchange via an
IPO of up to Ps16.7bn (US$324m).
Del Monte Pacific said around 20% of the
share capital, or 559.4m shares, would be
sold at a maximum price of Ps29.88. After
the IPO, it will still own at least 67% of the
subsidiary for five years.
BDO Capital is the sole global coordinator.
The funds will be used for debt
repayment and general corporate purposes.
The shares of Del Monte Philippines,
which makes canned pineapple and
tropical mixed fruits, tomato sauce,
spaghetti sauce and tomato ketchup, are
listed on the Singapore Exchange and PSE.
SINGAPORE
DEBT CAPITAL MARKETS
››GUOCOLAND TAPS 4.6% PERPETUALS
GUOCOLAND raised S$50m (US$38m) from a
tap of its existing 4.6% perpetual non-call
five bonds, priced at par with a spread of
260.9bp over Singapore dollar SOR.
The additional unsecured subordinated
notes, which settled on Thursday and
became fungible with the original perps,
raised the outstanding issue size to S$400m.
Proceeds will be used for general working
capital needs and capital expenditure.
GLL IHT is the issuer and parent
GuocoLand is the guarantor of the notes,
which come off a S$3bn multi-currency
MTN programme.
OCBC was sole lead manager and
bookrunner.
››SING POST SETS UP DEBT PROGRAMME
has established a S$1bn
SINGAPORE POST
multi-currency debt-issuance programme
with Credit Suisse and DBS Bank as joint
arrangers.
Notes sold under the programme will
pay fixed, floating or variable rates and
can be in the form of senior or perpetual
securities.
The issuer is a private operator and
provider of postal, e-commerce logistics
and retail services. It has two outstanding
bonds – a S$200m 3.5% note due in 2020
and a S$350m 4.25% perpetual callable in
2022.
Singapore Telecommunications has a
21.7% stake in the company and Alibaba
Investments has a 14.4% interest.
SYNDICATED LOANS
››GRAB DRIVES IN FOR MAIDEN LOAN
Ride-hailing company GRAB is making its
loan market debut with a S$400m–$500m
(US$300m–$375m) three-year borrowing,
which has been launched into general
syndication.
HSBC is coordinating the financing,
which has an average life of 2.5 years and
pays an interest margin of 225bp over
SOR.
Banks can join as lead arrangers
with S$75m or more to earn upfront
fees of 92.5bp, including for early-bird
commitments, for a top-level all-in of
262bp, or as arrangers with S$50m–$74m
to earn fees of 85bp for an all-in of 259bp,
or as managers with S$25m–$49m to earn
70bp for an all-in of 253bp.
The final deadline for responses is
February 28.
Grab was founded in Singapore in June
2012 and has quickly expanded to 55 cities
across South-East Asia. It has up to 2.5m
rides daily and more than 930,000 driver
partners.
Last July, Chinese ride-sharing giant
Didi Chuxing and Japanese technology
behemoth SoftBank Group agreed to
invest US$2bn in Grab, which operates
in Singapore, Malaysia, Indonesia, the
Philippines, Thailand, Vietnam, Myanmar
and Cambodia.
EQUITY CAPITAL MARKETS
››ASCENDAS PLACEMENT BRINGS S$100M
Singapore-listed ASCENDAS INDIA TRUST has
raised S$100m (US$76m) through the sale
of 97.4m units at the bottom of a S$1.027–
$1.083 price range.
The number of shares put up for sale was
increased to 97.4m from 73m.
Books were covered twice and the

GLP sponsors seek US$3.38bn funding
„„Loans Private-equity pair raising financing for equity contributions to acquiring consortium
Private-equity firms Hopu Investment
Management and Vanke Real Estate (Hong
Kong) are raising a US$3.38bn loan to back
their equity contributions to a consortium
that acquired Global Logistic Properties.
China Construction Bank (Asia) and
Industrial and Commercial Bank of China
are the mandated lead arrangers and
bookrunners.
Special-purpose vehicles NESTA
INVESTMENT PARTNERS II and NESTA INVESTMENT
PARTNERS III are the borrowers on the loan.
NIP II’s facility comprises a US$1.817bn
term loan and a US$223m revolving
credit, while NIP III’s borrowing is split
into a US1.23bn term loan and a US$110m
revolver.
The blended interest margin is 275bp
over Libor, while the blended tenor is 4.68
years.
Lenders receive a top-level blended
all-in pricing of 290bp and the mandated
lead arranger title for US$200m and
above, based on a blended participation
fee of 70.2bp, an all-in of 285bp and the
lead arranger title for US$100m–$199m,
via a fee of 46.8bp, and an all-in of 280bp
and the arranger title for US$50m–$99m,
via a fee of 23.4bp. The deadline for
commitments is February 9.
In December, GLP closed a US$4.108bn
leveraged buyout loan to support the
acquisition. Citigroup, DBS Bank, Goldman
Sachs, MUFG and Mizuho Bank were
original mandated lead arrangers and
bookrunners, while Bank of China, Bank of
Communications, China Merchants Bank and
Industrial & Commercial Bank of China joined
for the same title.
That loan offered a top-level blended
final price represented an 8.3% discount
to the pre-deal close of S$1.12. Close to
40 accounts took part in the sale and
allocation was mostly skewed towards
long-only institutional investors, real-estate
specialists and existing unitholders. The top
10 investors were allocated more than 80%
of the shares.
There is a 90-day lock-up period on the
issuer.
Proceeds will be used to refinance the
acquisition of warehouses at the Arshiya
Free Trade Warehousing Zone located at
Panvel near Mumbai.
Citigroup and DBS were the
bookrunners.
all-in of 135.4bp, based on a blended
interest margin of 124.06bp over Libor and
blended tenor of 3.095 years. The opening
margins are 135bp, 120bp, 110bp and 135bp
for tranches A1, A2, B and the revolver,
respectively. SPV Nesta Investment Holdings
is the borrower.
The loan, among the largest LBO
financings from Asia, will add to the debt of
US$5.1bn at the operating subsidiaries of
GLP, which existing lenders could roll over.
Last July, GLP, together with its
subsidiaries and Cayman Islands-
incorporate NIH jointly said that the SPV
would acquire all the shares of Asia’s
biggest warehouse operator for a cash
consideration of S$3.38 per share, valuing
the company’s equity at about S$16bn
(US$11.9bn).
China Vanke, the parent of Vanke Real
Estate, is the largest shareholder in NIH
with a 21.4% stake and contributed around
US$2.45bn, according to its filing with the
Hong Kong stock exchange on January 22.
Other members of the buying consortium are
Hillhouse Capital Group and SMG Eastern,
an entity under the full control of GLP CEO
Ming Zhi Mei, as well as Bank of China Group
Investment.
GLP was delisted from Singapore
Exchange on January 22.
On February 2, Fitch downgraded GLP’s
credit ratings to BBB from BBB+, on its
expectations that the holding company’s
leverage would increase sharply to over
70% after it drew down additional loans in
January. Fitch calculates the leverage as the
ratio of holding company net debt less net
working capital to holding company liquid
investment.
SOUTH KOREA
DEBT CAPITAL MARKETS
››DAEGU BANK DOES 5.5-YEAR PRINT
DAEGU BANK, rated A2/A– (Moody’s/S&P), drew
final orders of US$2.3bn from 138 accounts
for US$300m of US dollar senior unsecured
bonds.
It priced the 3.75% 5.5-year notes
at 99.479 to yield 3.856%, or five-year
Treasuries plus 135bp, the tight end of final
International Financing Review Asia February 10 2018 31
COUNTRY REPORT SOUTH KOREA
Fitch has said it believes leverage will
gradually decline, but that it may take more
than 24 months for GLP to deleverage below
50%. GLP’s leverage increased from below
25% at end-March 2017 after it took on debt
to provide financing to its new shareholders
to fund its buyout.
Fitch expects the holding company’s
interest coverage ratio, which is the ratio
of holding company’s recurring Ebitda to
interest paid, to be healthy at above 2x,
despite the increase in its loans. The agency
expects GLP’s recurring Ebitda interest
coverage to be 2.5x for the year ending
March 2018.
The company has put in place a
deleveraging plan, but its successful
execution within the next 24 months may not
be within GLP’s control. GLP’s deleveraging
plan includes asset recycling initiatives in
China and Japan to take advantage of the
low interest rates there.
In December, GLP announced that it had
obtained approval from the China Securities
Regulatory Commission to issue up to
Rmb12bn (US$1.88bn) of bonds in Shenzhen
for projects related to China’s Belt and Road
Initiative. Fitch has said the issuance will
take advantage of the low leverage of GLP’s
Chinese operating company.
GLP’s US$46bn of globally diversified
logistic assets were located in China (34%),
the US (33%), Japan (23%), Brazil (6%) and
Europe (4%) at December 2017. GLP is the
largest logistic asset owner in China, Japan
and Brazil.
GLP counts several of the world’s leading
retailers and manufacturers among its
clients.
EVELYNN LIN
guidance of Treasuries plus 135bp–140bp
and well inside the initial 155bp area.
Asia took 84% of the notes and Europe got
16%. In terms of investor types, 80% were
fund managers and asset managers, 9% were
banks, 8% were sovereign wealth funds and
insurers, 3% were private banks and others.
The Reg S notes have expected ratings of
A2/A– (Moody’s/S&P).
Citigroup, Credit Agricole and HSBC were
joint bookrunners.
Last November, Moody’s placed the
issuer’s long-term and short-term ratings
on review for downgrades after parent
company bought a controlling stake in Hi
Investment and Securities.
 Moody’s said the W450bn ($416.4m)
purchase would increase parent DGB
Financial Group’s debts, raising the
possibility that key subsidiary Daegu Bank
might need to service the debt.
TAIWAN
DEBT CAPITAL MARKETS
››ASIAN ISSUERS PRINT FORMOSAS
The Taiwan Formosa bond market
continued to provide ample fundraising
opportunities for Asian issuers in the first
five weeks of the year.
DBS BANK sold US$250m 30-year zero-
coupon bonds non-callable for the first
five years. The notes, which can be called
annually thereafter, pay an internal rate of
return of 4.02%.
SinoPac Securities and Yuanta Securities were
leads on the trade.
EXPORT-IMPORT BANK OF KOREA, rated Aa2/AA/
AA–, visited the Taiwan market twice to raise
renminbi. It priced a Rmb300m (US$48m)
six-year issue at par to yield 4.69% and a
Rmb270m three-year trade priced at par to
yield 4.66%. Deutsche Bank handled both trades.
BANK OF TOKYO-MITSUBISHI UFJ sold US$150m
of 30-year zero-coupon notes, callable in
January 2023 and every third anniversary
thereafter. The notes, rated A1/A (Moody’s/
S&P), pay an IRR of 4.10%.
MasterLink Securities and E Sun Commercial
Bank were underwriters.
SYNDICATED LOANS
››SMBC AVIATION LAUNCHES LOAN
Aircraft-leasing company SMBC AVIATION
CAPITAL has launched a five-year borrowing
of US$600m, split into a US$200m term
loan and a US$400m revolving credit.
ANZ, Apple Bank for Savings, Bank of China,
Singapore branch, Cathay United Bank,
Citigroup, Maybank, OCBC Bank and Westpac,
Singapore branch, are mandated lead
arrangers and bookrunners on the unsecured
facility. Citigroup is the global coordinator.
The respective interest margins for the
term loan and revolver are 97bp and 102bp
over Libor.
Based on a blended average life of 4.67
years, banks can join on a pro-rata basis for
a top-level all-in of 112.1bp and the lead
manager title, through a 55bp management
fee, for US$20m or more. A bank meeting
will be held in Taipei on February 7.
Commitments are due on March 2.
SMBC Aviation Capital Netherlands is
the borrower, while Ireland-based SMBC
Aviation Capital is guarantor. Funds will be
used for general corporate purposes.
In August 2015, SMBC Aviation Capital
raised a US$600m four-year club loan from
Citigroup, Credit Agricole, Goldman Sachs,
Royal Bank of Canada and JP Morgan.
SMBC Aviation Capital, rated A–/BBB+
(Fitch/S&P), is the fourth-largest aircraft lessor
worldwide with 255 owned, 197 managed
and 214 committed aircraft as of September
30 2017. Sumitomo Mitsui Financial Group
controls 66% of SMBC Aviation Capital, while
Sumitomo Corp owns 34%.
››TPK SEEKS LOAN OF UP TO US$200M
TPK HOLDINGhas launched a three-year
refinancing loan of up to US$200m through
mandated lead arranger and bookrunner
Mega International Commercial Bank.
The touch-panel maker’s facility carries
an interest margin of 120bp over Libor. The
borrower will pay any excess interest rate
beyond a 40bp difference between TAIFX
and Libor.
Banks can join as MLAs with US$25m or
more for an upfront fee of 25bp, or as lead
arrangers with US$20m–$24m for a 20bp

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fee, or as managers with US$10m–$19m for
a 10bp fee. The deadline for responses is
March 30.
In July 2011, TPK Universal Solutions,
a unit of TPK Holding, raised a US$200m
three-year loan. Citigroup led that loan,
which offered a margin of 80bp over Libor.
TPK Holding, a supplier to Apple,
operates in Taiwan and internationally.
››TWO WIN TOP ROLE FOR ASE
ADVANCED SEMICONDUCTOR ENGINEERING has
named two banks for top roles on a
NT$90bn (US$3bn) five-year term loan
to back its merger with peer Siliconware
Precision Industries.
Bank of Taiwan and Mega International
Commercial Bank have been named facility
agents for the loan, which has already
received total commitments of NT$200bn
with syndication expected to close soon.
Coordinator Citigroup launched the loan
in late December, offering an interest
margin of 55bp over Taibor, with a pre-tax
interest rate floor set at 1.7%.
Mandated lead arrangers and
bookrunners committing NT$7bn or more
or NT$5bn–$6.9bn will get respective
upfront fees of 30bp or 25bp, while MLAs
with NT$3bn–$4.9bn will get a 20bp fee,
lead managers with NT$2bn–$2.9bn will
get a 15bp fee and managers with NT$1bn–
$1.9bn will get a 10bp fee.
Last November, China’s Anti-Monopoly
Bureau said it had approved the merger
conditionally, requiring both to operate
separately for the next 24 months.
ASE plans to create a new holding company,
ASE Industrial Holding, before the end of May
after ASE and SPIL shareholders vote on the
merger at a meeting scheduled for this month.
ASE Industrial will be the borrower on the
NT$90bn loan and ASE will be the guarantor.
THAILAND
DEBT CAPITAL MARKETS
››FRASERS PROP PLANS RETURN
FRASERS PROPERTY HOLDINGS THAILAND will sell
bonds of up to Bt5bn (US$159m) at end-
February on its market return after a
Bt2.5bn maiden issue late last year.
The Thai real-estate company is expected
to offer tenors of three, five and 10 years to
raise a targeted minimum of Bt3.2bn, with
a greenshoe option of Bt1.75bn.
Bookbuilding is expected to be carried
out in the week of February 19 with
settlement scheduled for month-end.
Bangkok Bank, Bank of Ayudhya and UOB
Thailand are joint lead managers and
underwriters.
Frasers Property is a unit of Singapore-
based property developer Frasers Property
(formerly Frasers Centrepoint), which is
ultimately under the control of Thai tycoon
Charoen Sirivadhanabhakdi’s TCC Group.
It sold seven-year bonds at 2.94% in
December.
››MUANGTHAI READIES BT3BN ISSUE
MUANGTHAI LEASING will offer bonds of up
to Bt3bn at maturities of three and four
years to institutional and high-net-worth
investors at the end of the month.
The Bt2.5bn three-year piece will pay
3.7%, while the Bt1.5bn four-year portion
pays 3.95%.
Investors can subscribe to the bonds on
February 23-27. The Thai auto-financing
company, which Tris rates BBB, will use the
proceeds for working capital and business
expansion.
Bangkok Bank, Krungthai Bank and Phatra
Securities are joint lead managers and
underwriters.
››QUALITY HOUSES PLANS BT3BN PRINT
Thai property owner and developer QUALITY
HOUSES plans to raise up to Bt3bn from the
sale of three-year bonds later this month.
Preliminary price talk is at a spread range
of 55bp–59bp over Thai government bonds,
but this may change when bookbuilding
kicks off on February 20.
The issuer, with a A– Tris rating, is
targeting minimum proceeds of Bt2.5bn,
plus a Bt500m greenshoe.
Bangkok Bank, Krungthai Bank and UOB
Thailand are joint lead managers and
underwriters.
Proceeds are likely to refinance a Bt4bn
3.18% bond due on February 20.
››KTC LIFTS DUAL-TRANCHER TO BT2.25BN
KRUNGTHAI CARD priced dual-tranche bonds of
five and 10 years to raise Bt2.25bn, lifting
the issue size from an original Bt1.5bn.
The Bt1bn five-year piece will pay 2.35%
and the Bt1.25bn 10-year portion will pay
3.43% with respective spreads at 53bp and
88bp over Thai government bonds.
Institutional and high-net-worth
investors can subscribe to the notes on
February 13-15.
The Thai credit card services provider,
with a A+ Tris rating, will use the proceeds
for working capital and business expansion.
Krungthai Bank and UOB Thailand were
joint lead managers and underwriters.
International Financing Review Asia February 10 2018 33
COUNTRY REPORT THAILAND
››SIAMGAS PLANS CGIF BONDS
SIAMGAS AND PETROCHEMICALS plans to issue
up to Bt2bn of five-year bonds with
a partial guarantee from the Credit
Guarantee Investment Facility of the Asian
Development Bank.
Kasikornbank, Krungthai Bank and UOB
Thailand are joint lead managers and
underwriters on the issue.
The liquefied petroleum gas distributor’s
issue will be the first baht notes from a Thai
company to come with the CGIF wrap. There
were two baht-denominated CGIF-guaranteed
notes in the past but these were from foreign
issuers Noble Group and KNM Group.
Under the guarantee, the CGIF will
provide unconditional and irrevocable
guarantee for up to 85% of the principal
amount and of unpaid interest.
As a result of the wrap, the unsecured
bonds scored a A rating from Tris, one
notch above Siamgas’s corporate BBB.
The guarantee will improve Siamgas’s
credit profile in addition to cutting funding
costs and allowing it to extend its maturity
curve. Proceeds will be used for working
capital needs.
VIETNAM
SYNDICATED LOANS
››SIX JOIN VIETINBANK FACILITY
A US$100m term loan for VIETNAM JOINT
STOCK COMMERCIAL BANK FOR INDUSTRY AND
TRADE has seen six lenders join in general
syndication.
Mitsubishi UFJ Financial Group is sole
mandated lead arranger and bookrunner
on the loan, which has already received
commitments of over US$90m. More banks
are expected to join the loan, which will
close before the Lunar New Year.
The loan, which the borrower and the
MLAB signed on December 29, pays a top-
level all-in pricing of 135bp, based on an
interest margin of 115bp and a two-year
average life. Funds are for on-lending
purposes.
The borrower last raised a US$100m
three-year bullet loan in February 2017.
Deutsche Bank was the sole MLAB of
the facility, which attracted seven other
lenders. The loan offered a top-level all-in
of 170bp, based on an interest margin of
140bp over Libor.
VietinBank, one of the four largest state-
owned commercial banks in the country, is
rated B1/BB–/B+.
 ASIA DATA
ASIAN SYNDICATED LOAN PIPELINE UPDATES WEEK OF 5 FEBRUARY
Company Currency Size (m) Margin (All-in) Tenor (mths) Facility Arrangers
Hong Kong
China SCE Property Holdings US$ 300 330 (390) 42 Term Loan HSBC, Hang Seng Bank, BoC
Far East Horizon US$ 800 130 (155) 36 Term Loan Taishin Financial Holding, E Sun Commercial Bank, CCB,
China Merchants Bank, BTMU
Hong Kong Tiancheng Investment & Trading US$ 200 128 (165) 36 Term Loan SCB, ANZ
Trimco International Holdings US$ 150 60 Term Loan CTBC, Cathay Financial Holdings
India
Indiabulls Housing Finance US$ 200 120 (143) 60 Revolver/Term Loan State Bank of India, BTMU
Power Finance Corp US$ 250 60 Revolver/Term Loan
Rural Electrification Corp US$ 400 36 Revolver/Term Loan
Indonesia
CSM Corporatama US$ 100 190 (211) Term Loan ANZ, CTBC, DBS, SCB, CIMB
Tiphone Mobile Indonesia Rp 1,250,000 300 36 Term Loan Bank Central Asia, CIMB, SCB
US$ 94 200 (218) 36 Term Loan Bank Central Asia, CIMB, SCB
Japan
Japan Oil Gas & Metals National Corp ¥ 36,818 12 Term Loan
Taiwan
ChipMos Technologies Inc NT$ 10,000 Revolver/Term Loan
Pou Chen Corp NT$ 30,000 60 Revolver/Term Loan
Source: Thomson Reuters LPC

LAST WEEK’S ECM DEALS

Stock Country Date Amount Price Deal type Bookrunner(s)
A-Living Services China 02/02/18 HK$4.1bn HK$12.30 IPO (Primary) HSBC, Huatai Financial, Morgan Stanley, ABC International,
BNP Paribas, CCB International, China Sec International,
ICBC International
Land & Houses Thailand 04/02/18 Bt10.6bn Bt10.90 Follow-on (Secondary) BAML, Phatra
Vincom Retail Vietnam 05/02/18 D4.51trn D47,750 Follow-on (Secondary) Citigroup, Credit Suisse, Deutsche Bank, Maybank
Ascendas Retail Trust Singapore 05/02/18 S$100m $1.027 Follow-on (Primary) Citigroup, DBS
Bank of Gansu China 06/02/18 HK$893m HK$2.69 IPO Greenshoe (Primary) BOC International, CCB International, CMB International,
Guotai Junan International, Huatai Financial
China Overseas Grand Oceans China 06/02/18 HK$4.65bn HK$4.08 Follow-on (Primary) China Overseas Land & Investment
Huami China 07/02/18 US$110m US$11 IPO (Primary) Credit Suisse, Citigroup, China Renaissance
JinkoSolar China 07/02/18 US$65m US$18.15 Follow-on (Primary) Barclays, Credit Suisse
Source: IFR Asia

MERRILL LYNCH ASIAN DOLLAR INDEX

Index Description Index level 1 week total return 1 month total return 3 months total return OAS
ADIG Asian-dollar high-grade index 385.904 –0.469 –1.302 –1.539 113
ADHY Asian-dollar high-yield index 613.834 –0.542 –0.529 –0.012 375
AGIG Asian-dollar government high-grade index 359.200 –0.767 –1.706 –1.527 99
AGHY Asian-dollar government high-yield index 725.145 –1.308 –1.391 –0.333 289
ACIG Asian-dollar corporate high-grade index 411.124 –0.365 –1.161 –1.555 119
ACHY Asian-dollar corporate high-yield index 504.315 –0.383 –0.348 0.062 392
Source: Merrill Lynch

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34 International Financing Review Asia February 10 2018

 ASIA DATA

ASIAN CURRENCY BOND ISSUANCE (1)

Issuer Currency Amount Maturity Pay date Coupon Issue price Product Leads
AJ Networks W 15bn 1y 05/02/18 100 Senior Bonds IBK Sec
W 25bn 2y 05/02/18 100 Senior Bonds IBK Sec
AJ Rent A Car W 45bn 3y 05/02/18 100 Senior Bonds Korea Investment & Sec
W 35bn 2y 05/02/18 100 Senior Bonds Korea Investment & Sec
AVIC Leasing Rmb 1.3bn 3y 02/02/18 100 Medium-Term Nts Bank of Shanghai, Haitong Sec
Bank of China (Macau) HK$ 764m 1y 09/02/18 1.95 100 Fxd Rte CDs Standard Chartered (HK)
BS Capital W 30bn 3y 06/02/18 100 Senior Bonds Korea Asset Investment Sec
W 10bn 3y 06/02/18 100 Senior Bonds Korea Asset Investment Sec
W 10bn 4y 06/02/18 100 Senior Bonds Korea Asset Investment Sec
W 40bn 5y 06/02/18 100 Senior Bonds Korea Asset Investment Sec
Busan Port Authority W 200bn 10y 05/02/18 100 Senior Bonds Kyobo Sec
W 150bn 20y 05/02/18 100 Senior Bonds NH Investment & Sec
CCB (Sydney) A$ 100.112m 3y 09/02/18 Bank Bill 100.112 Transfer CD National Australia Bank
Swap Rate+91bp
China Construction Sixth Rmb 1bn 5y 06/02/18 6.55 100 Gtd Secured Nts Ping An Sec
Citic Capital Eq Invest Rmb 1bn 3y 08/02/18 100 Medium-Term Nts China Citic
Citigroup Capital Korea W 3.5bn 2y 05/02/18 100 Senior Bonds KTB Investment & Sec
W 14bn 1y 06/02/18 100 Senior Bonds HI Investment & Sec
Dgb Finl W 150bn 08/02/18 100 Subord Bonds KBI Sec
Doosan Infracore W 20bn 1y 02/02/18 100 Senior Bonds Kumho Investment Bank
W 10bn 1y 02/02/18 100 Senior Bonds Korea Investment & Sec
W 10bn 1y 02/02/18 100 Senior Bonds Korea Investment & Sec
Emirates NBD Bank PJSC A$ 448.407m 10y 09/02/18 4.75 99.646 Medium-Term Nts ANZ Banking Group, Nomura Sec, Emirates NBD Capital
Export Development Canada A$ 124.793m 5y 13/02/18 2.7 99.834 Gtd Mdm-Trm Nts Nomura Australia
Finance Department of Sharjah Rmb 2bn 3y 08/02/18 5.8 100 Sr Med Term Nts Bank of China, ICBC, HSBC, Standard Chartered
Galaxy Ind Shenzhen Rmb 1bn 3y 06/02/18 100 Medium-Term Nts Industrial Bank
Gangwondo Development W 40bn 1y 05/02/18 100 Senior Bonds Samsung Sec
Guangxi Invest Rmb 500m 3y 07/02/18 100 Unsecured Bond Haitong Sec, Sealand Sec, Huarong Sec
Rmb 500m 5y 07/02/18 100 Unsecured Bond Haitong Sec, Sealand Sec, Huarong Sec
Guangzhou Metro Rmb 3bn 5y 07/02/18 100 Medium-Term Nts ABC, ICBC
Guizhou Hongguo Econ Rmb 350m 7y 08/02/18 100 St Enterprise Xiangcai Sec
GX Xijiang Group Rmb 500m 5y 08/02/18 100 Medium-Term Nts BoCom
Hailiang Group Rmb 500m 1y 07/02/18 100 CP Bohai Bank
Haitong Intl Sec HK$ 200m 1y 12/02/18 2.65 100 Medium-Term Nts Standard Chartered (HK)
Halla Corp W 5bn 1y 06/02/18 100 Senior Bonds CAPE Investment & Sec
Hanjin Transportation W 78bn 1y 07/02/18 100 Senior Bonds Kiwoom Sec
Hansol Paper W 100bn 3y 06/02/18 100 Senior Bonds Mirae Asset Daewoo
Hengyang Urban Constr Invest Rmb 1bn 1y 08/02/18 100 CP China Guangfa Bank
Hotel Lotte W 140bn 3y 08/02/18 100 Senior Bonds KBI Sec
W 110bn 5y 08/02/18 100 Senior Bonds KBI Sec
W 100bn 2y 06/02/18 100 Senior Bonds Shinhan Investment Corp
Huaian Dvlp Holdings Rmb 800m 5y 06/02/18 100 Medium-Term Nts Everbright Sec, CMB
Huayuan Industry & Trade Group Rmb 500m 1y 07/02/18 100 CP Haitong Sec, China Citic, ABC
Hyundai Capital Services Inc W 30bn 2y 02/02/18 100 Senior Bonds KBI Sec
W 30bn 3y 06/02/18 100 Flt Rt Sr Bonds Mirae Asset Daewoo
W 10bn 2y 06/02/18 100 Senior Bonds Mirae Asset Daewoo
Hyundai Card W 30bn 5y 01/02/18 100 Flt Rt Sr Bonds SK Sec
Hyundai Commercial Inc W 20bn 3y 05/02/18 100 Senior Bonds KBI Sec
W 20bn 5y 05/02/18 100 Senior Bonds KBI Sec
Hyundai Engineering & Constr W 180bn 5y 08/02/18 100 Senior Bonds Mirae Asset Daewoo
W 120bn 3y 08/02/18 100 Senior Bonds Mirae Asset Daewoo
Indiabulls Housing Finance Rs 3.15bn 3y 06/02/18 7.8 100 Medium-Term Nts HSBC
Inner Mongolia Highway Constr Rmb 1bn 5y 07/02/18 100 Medium-Term Nts Industrial Bank
Jiangxi Railway Invest Rmb 1bn 3y 02/02/18 5.82 100 Medium-Term Nts CMB, CCB
Jining City Urban Constr Rmb 900m 5y 05/02/18 6.25 100 Medium-Term Nts CCB, CMBC

International Financing Review Asia February 10 2018 35

ASIAN CURRENCY BOND ISSUANCE (2)
Issuer Currency Amount Maturity Pay date Coupon Issue price Product Leads
Jinke Ppty Rmb 500m 2y 08/02/18 100 Unsecured Bond Zhongshan Sec, Guotong Sec
Rmb 500m 3y 08/02/18 100 Unsecured Bond Zhongshan Sec, Guotong Sec
KB Capital W 50bn 3y 01/02/18 100 Senior Bonds Mirae Asset Daewoo
W 30bn 2y 01/02/18 100 Senior Bonds Mirae Asset Daewoo
W 70bn 3y 01/02/18 100 Senior Bonds Mirae Asset Daewoo
W 10bn 3y 01/02/18 100 Senior Bonds Mirae Asset Daewoo
KEB Hana Bank W 200bn 1y 01/02/18 100 Flt Rt Sr Bonds KTB Investment & Sec
W 98.08bn 1y 02/02/18 98.08 Senior Bonds Eugene Invest & Sec
Kolon Global Corp W 10bn 1y 05/02/18 100 Senior Bonds Kumho Investment Bank
Kommunalbanken AS A$ 49.717m 10y 09/02/18 3.4 99.433 Medium-Term Nts RBC Capital Markets
Korea Investment Holdings W 200bn 3y 05/02/18 100 Senior Bonds HMC Investment Sec
Landwirtschaftliche Rentenbank A$ 50.17m 10y 09/02/18 3.25 100.34 Gtd Mdm-Trm Nts Deutsche (Australia)
LG Card W 50bn 5y 06/02/18 100 Senior Bonds Kyobo Sec
LiuZhou Invest Hldg Rmb 1.5bn 08/02/18 100 Medium-Term Nts Huaxia Bank, China Galaxy Sec
Lotte Capital W 20bn 3y 05/02/18 100 Senior Bonds Mirae Asset Daewoo
W 20bn 3y 05/02/18 100 Senior Bonds Mirae Asset Daewoo
W 10bn 5y 05/02/18 100 Senior Bonds Mirae Asset Daewoo
W 20bn 2y 05/02/18 100 Senior Bonds Mirae Asset Daewoo
LS Cable & System W 100bn 3y 09/02/18 100 Senior Bonds NH Investment & Sec
W 30bn 5y 09/02/18 100 Senior Bonds NH Investment & Sec
Mercedes-Benz Fin Svcs Korea W 130bn 2y 07/02/18 100 Senior Bonds Korea Investment & Sec
NABARD Rs 1.35bn 15y 02/02/18 7.99 100 Bonds ICICI Bank, AK Capital Services, Trust Investment Advisors,
HDFC
Nanjing Liuhe Econ Rmb 500m 05/02/18 100 Medium-Term Nts Shanghai Pudong
Nantong High and New Tech Rmb 700m 1y 07/02/18 100 CP China Citic, CSC Financial
NH Capital W 30bn 3y 31/01/18 100 Senior Bonds IBK Sec
W 30bn 3y 31/01/18 100 Senior Bonds IBK Sec
W 20bn 4y 31/01/18 100 Senior Bonds IBK Sec
Palm Eco-Town Development Rmb 200m 2y 06/02/18 6.48 100 Gtd Secured Nts Guotai Junan Sec
Rmb 100m 2y 06/02/18 6.26 100 Gtd Secured Nts Guotai Junan Sec
Quanzhou Taiwanese Invest Rmb 500m 3y 08/02/18 100 Medium-Term Nts GF Sec, CCB
Shandong Hongqiao New Rmb 1bn 1y 05/02/18 100 CP China Citic
Shanghai Fosun High Tech Rmb 2bn 2y 05/02/18 100 Medium-Term Nts Postal Savings Bank Of China, CMB
Shanghai Shimao Rmb 800m 3y 06/02/18 100 Medium-Term Nts CMBC
Shangrao City State-owned Rmb 1.2bn 3y 06/02/18 100 Medium-Term Nts Haitong Sec, CMBC
Shenzhen Baiyeyuan Invest Rmb 550m 3y 08/02/18 100 Medium-Term Nts Industrial Bank
Shenzhen Overseas Chinese Town Rmb 3bn 5y 05/02/18 5.74 100 Unsecured Bond CITIC Sec
Rmb 2bn 3y 05/02/18 5.54 100 Unsecured Bond CITIC Sec
Shinsegae Chosun Hotel W 10bn 5y 05/02/18 100 Senior Bonds HI Investment & Sec
W 10bn 3y 05/02/18 100 Senior Bonds Mirae Asset Daewoo
Sichuan Commun Invest Rmb 2bn 3y 08/02/18 100 Medium-Term Nts China Everbright Bank, ICBC
Suhyup Bank W 150bn 2y 01/02/18 100 Senior Bonds KTB Investment & Sec
Suzhou Electrical Apparatus Rmb 230m 3y 02/02/18 7 100 Medium-Term Nts China Everbright Bank
Taizhou Gaojiao Invest Rmb 600m 3y 06/02/18 100 Medium-Term Nts Huatai Sec, China Citic
United India Insurance Rs 9bn 10y 02/02/18 8.25 100 Subord Debs Axis Bank, Edelweiss Financial Svcs, ICICI Bank,
LKP Shares & Sec, Tipsons
Wanda Group Share Rmb 500m 1y 07/02/18 100 CP Bank of China
Wanzhou Commercial Bank Rmb 1bn 10y 08/02/18 100 St Enterprise ICBC, Everbright Sec, Essence Sec
Wharf Reic Fin Bvi HK$ 499.375m 7y 05/02/18 2.95 99.875 Gtd Sr Notes Mizuho Sec
World Bank A$ 499.23m 11y 14/02/18 3.3 99.846 Medium-Term Nts Deutsche (Australia), Nomura Australia
xiaogan Urban Construction Rmb 400m 1y 02/02/18 5.61 100 CP China Citic, BoCom
Xinjiang Runsheng Invest Rmb 300m 1y 05/02/18 100 CP CDB
Xinjiang Xinye State-Owned Rmb 100m 5y 07/02/18 100 Unsecured Bond Xiangcai Sec
Rmb 200m 3y 07/02/18 100 Unsecured Bond Xiangcai Sec
Xuancheng State-Owned Asts Rmb 1bn 3y 07/02/18 100 Medium-Term Nts Industrial Bank
Yan Kuang Group Rmb 2bn 3y 07/02/18 100 Medium-Term Nts Ping An Bank
Yang Quan Coal Industry Rmb 1bn 1y 05/02/18 5.47 100 CP China Everbright Bank
Zigui County Investment Rmb 200m 10y 12/02/18 100 St Enterprise Changjiang Sec
Source: IFR Asia

36 International Financing Review Asia February 10 2018

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