As markets remain buoyant, CapitaMall Trust (CMT), Citic Pacific and Siam Commercial Bank all charged into the international debt markets yesterday, with the first two collectively raising more than $1 billion.
Hong Kong-listed Citic Pacific last night priced a $750 million long five-year bond. Citic Pacific is a conglomerate that is 57.6% owned by China's state-owned Citic Group. It is engaged in steel making, iron ore mining, property development and power generation. While Citic Pacific benefits from having a strong parent, the company has slipped from investment-grade status into high-yield territory since it last tapped the market in April 2011, making it something of a "fallen angel”.
Despite this, investors welcomed the company's return to the bond market by putting in more than $3 billion worth of orders. This allowed the deal to be upsized to $750 million from $500 million. About 85% of the deal was allocated to Asian investors -- a reflection of their familiarity with the Citic name.
The initial guidance was in the area of 7%, which was later tightened to 6.875% to 7%. The bonds priced at the tight end, which was equivalent to a spread of 598.7bp over five-year Treasuries. The coupon was fixed at 6.875% and the notes were issued at par.
HSBC and UBS were joint global coordinators and bookrunners. Deutsche Bank and Standard Chartered were also bookrunners.
The outstanding Citic Pacific 2021s were quoted at a cash price of 96 and a yield of 7.23%, so the new bonds that mature in January 2018 came 35.5bp inside of that. Citic Pacific was said to have opted for a long five-year tenor as it has debt that matures in 2017 and wanted to avoid bunching up maturities. Also, as it already has access to five-year funding in the loan market, it was keen to push on tenor, and a long five-year bond achieved the best pricing.
Citic Pacific last tapped the market with a $500 million senior 10-year bond in April 2011, which offered a yield of 6.625%. At that time, S&P rated the bonds BBB-. Its latest senior bond issue is rated BB+ by S&P and Ba1 by Moody’s.
Meanwhile, out of Singapore, Temasek-linked CapitaMall Trust priced a $400 million six-year bond at Treasuries plus 285bp, which came at the tight end of final guidance at Treasuries plus 285bp to 295bp. Initial guidance was in the area of Treasuries plus 312.5bp.
HSBC, Morgan Stanley and Standard Chartered were the arrangers. The issue is expected to be rated A3 stable. As with many recent investment-grade names, this deal attracted overwhelming demand from investors, with an order book in excess of $3 billion by yesterday afternoon.
“The demand we are seeing for high-quality investment-grade names out of Asia is extraordinary,” said one banker. “We are seeing new investors come in. I think it will get busier as a lot of companies are now in a black-out period. Once that is done, more deals will be announced.”
CMT last tapped the bond market in 2010 with a $500 million five-year bond arranged by sole bookrunner Morgan Stanley, which priced at Treasuries plus 172bp to yield 4.321%. Its latest bond offered a coupon of 3.731% and was issued at par. The CMT 2015s were at Treasuries plus 250bp and the new bonds, which mature on March 21, 2018, came 35bp back of that.
Finally, Thailand’s Siam Commercial Bank was also in the market with a five-and-a-half year dollar bond arranged by Barclays Capital and Citi. The Thai lender last tapped the market in May 2011, with a $400 million deal arranged by Barclays Capital and Deutsche Bank.
Interestingly, this latest deal marks a return for Citi on a Siam Commercial Bank offering. The US bank was originally mandated alongside BNP Paribas for a dollar bond that failed to materialise, after which the Thai bank mandated Barclays and Deutsche for the 2011 bond.
Elsewhere in high-yield, Chinese property developer Agile Property has mandated HSBC, Standard Chartered and UBS for a dollar benchmark bond, which is expected to price today. The Chinese company turned to its lenders for the deal. HSBC is a key provider of bank lending to the firm and Standard Chartered has just signed a loan facility of $100 million.
The company held simultaneous roadshows in Hong Kong and Singapore yesterday, as well as calls with key accounts in Europe. The issue is expected to be rated Ba2 by Moody's and BB by S&P – the same as the issuer rating. The fund raising is expected to be capped because if Agile Property's net debt increases by $600 million or more, it is expected to trigger a ratings downgrade.
Separately, on Friday last week, Philippine mining company Carmen Copper raised $300 million through an unrated five-year bond. The majority of the bonds were placed onshore and the issue was sold entirely to banks, including local banks and private banks. The coupon was fixed at 6.50% and the notes were reoffered at 98.950 to yield 6.75%. BDO and Credit Suisse were joint bookrunners.
