China Aoyuan Property, Beijing State-Owned Assets Management, and Industrial and Commercial Bank of China sold dollar-denominated Reg S-only bonds on Monday as the supply of new bonds from mainland Chinese borrowers surged to record levels.
Rated B-/B+, China Aoyuan Property raised a $250 million three-year note at a yield of 11.25%, some way tighter than its initial price guidance area of 11.625%, according to a term sheet seen by FinanceAsia.
Government-owned investment management firm Beijing State-Owned Asset Management sold a dual-tranche note. Rated A3/A-/A, the borrower priced $300 million five-year and $700 million 10-year offerings at US Treasuries plus 160 basis points and 205bp, respectively, approximately 25bp tighter than their initial price guidance areas.
ICBC, the world’s largest bank by assets, launched a $500 million five-year bond via its Dubai branch. The financial institution priced the A1 rated senior unsecured note at Treasuries plus 120bp, some 25bp tighter than initial price guidance.
Asian bond markets, especially Chinese, have remained resilient in the face of a selloff in Western sovereign bonds. Even before Monday's triple helping, Dealogic data already showed Chinese issuers sold a record $45.1 billion-worth of bonds denominated in dollars, euros, or yen — so called G3 bonds — in the year-to-date period. Spread over 52 deals, the total funds raised was 17% higher than in the same period last year.
G3 Asia ex-Japan volumes last week alone totaled $4.95 billion, according to Dealogic, underlining the market's current hot run of form.
Prior to Monday, Chinese corporate investment-grade debt issuance was 26% higher year-on-year at $39 billion, accounting for 87% of total Chinese debt capital markets activity in 2015, Dealogic said.
Strong backdrop
Asian investment-grade credit spreads tightened across the board last week by around 3bp to 5bp, with China triple-B property names outperforming, Goldman Sachs’s analyst Kenneth Ho said on Monday.
The spread tightening absorbed a rise in benchmark government bond yields, with those on 10-year US Treasury and German government bonds up 7bp at 2.22% and 16bp at 0.7%, respectively, according to Bloomberg bond data.
The weaker data likely prompted Chinese policymakers to cut interest rates by 25bp. Economists expect further policy stimulus in the coming months as Chinese economic growth slows.
India industrial production in March, meanwhile, was weaker than expected at 2.1% year-on-year, versus a market consensus of 3.0%.
Citi and UBS are the joint global coordinators and bookrunners of Beijing State-Owned Asset Management’s note.
UBS is the joint global coordinator and bookrunner of China Aoyuan’s transaction. Other joint book runners include ABC International, Bank of America Merrill Lynch and Guotai Junan International.
Citi, Emirates NBD Capital, ICBC International and NBAD were joint global book runners on ICBC’s deal.
