Qingdao City Construction Investment and Chinese developer Century Properties have mandated banks for separate global investor meetings beginning February 2, seeking to make use of the favourable issuance window before the Lunar New Year holidays.
Hong Kong International (Qingdao), a subsidiary of Qingdao City Construction Investment, has appointed BNP Paribas as global coordinator and joint bookrunner of its proposed dollar-denominated Reg S bond, according to a source familiar with the matter.
Other joint bookrunners for the BBB-/BBB+ rated deal include China Merchant Securities (Hong Kong), Huatai Financial and Wing Lung Bank.
The investor roadshow of Qingdao City’s proposed bond — which is supported by a keepwell deed, equity interest purchase undertaking and an irrevocable cross-border dollar standby facility agreement — will take place in Hong Kong, Singapore and London.
Century Properties, meanwhile, has mandated HSBC, Standard Chartered and UBS. Investor meetings for the unrated bond will take place in Hong Kong and Singapore. A potential Reg S bond could follow subject to market conditions.
Borrowers are keen to make use of the issuance window before it closes for the Lunar New Year holiday, which begins on February 19, buoyed by improving market sentiment, say debt capital market bankers.
“I do think there would be more high-yield deals before the Chinese New Year,” said a Hong Kong-based DCM banker, adding that first-time issuers would still need to pay a premium of at least 25bp to 40bp, depending on the sector. “Issuers should access the market earlier rather than later.”
Investor sentiment towards the high-yield market is stabilising, with recent new issuances outperforming. For example, Delhi International Airport — Asia’s first junk offering of the year — traded to an all-time high of 102.834 on January 30.
Meanwhile, the first Chinese high-yield bond, Sino-Ocean’s recent dual-tranche offering has also performed well. The borrower’s five- and 12-year notes moved up from its reoffer price of 98.806 and 98.737 to a high of 99.029 and 101.803 on January 30.
“Clearly there’s still a lot of money out there that needs to be put to work,” said the DCM banker.
Market volatility has dwindled somewhat, buoyed by clarity within the eurozone and steps taken by the European Central Bank to boost the region's waning growth. Also, economic data released on Friday suggested Japan is pulling out of recession.
Japan's industrial output edged higher in December, suggesting the world's third-largest economy may be turning the corner on a recession brought on by a hefty sales tax hike. Manufacturing output increased 0.3% in December from a year earlier and by 1% from the month before. Japan's jobless rate dipped to 3.4% from 3.5% the month before.
On the other hand, the market is still spooked by Chinese developer Kaisa. On Friday, Chinese media reported that Sunac has agreed to acquire the Kwok family’s 49.3% holding in the real estate company, causing the Kaisa bond complex to rally.
On Friday alone, Kaisa's outstanding bonds traded some 15bp upwards. “The potential investment by Sunac is viewed positively given that it may facilitate a timely return to healthy operations,” said Charles MacGregor, head of Asia for credit research firm Lucror Analytics in a note on Friday.
MAXpower, the Indonesian gas-power specialist, hopes to take advantage of Asian credit’s strong secondary market momentum with the launch of a debut high-yield bond. The B1/B1/B rated group began roadshows for a $250 million bond on Tuesday.
Indonesian telecoms group Tower Bersama, also met investors in Asia and Europe the week of January 26 for a potential international bond. The BB/Ba2 rated company has picked Goldman Sachs, JP Morgan and Standard Chartered as global joint bookrunners.
