This week has been a slow one in the Asian debt markets, with public holidays in Hong Kong on Wednesday and Friday, and most investors packing their bags for the upcoming Easter vacation. However, consumer electronics company and chip maker Samsung Electronics early Tuesday morning returned to the debt markets with an ultra-low-yielding $1 billion bond that was predominantly sold to US investors.
Samsung Electronics is headquartered in Korea but the deal was being run out of the US — with North America scooping up 90% of the deal. Asian investors took 6% and European investors 4%. The chip company printed the five-year bond at Treasuries plus 80bp, well below the initial talk of Treasuries plus 100bp and one of the lowest spreads for a company out of Asia. The deal attracted an order book of more than $4 billion.
Samsung is a high-grade borrower whose bonds are rated A1 by Moody's and A by Standard & Poor's. The bonds were issued via Samsung Electronics America and are guaranteed by Samsung Electronics. The coupon was fixed at 1.75% — the lowest ever for a five-year bond by a Korean issuer — and the notes were reoffered at 99.634 to yield 1.829%.
Prior to this, the lowest coupon a Korean issuer has achieved for a five-year bond is said to be Korea National Oil Corp's $700 million bond in 2010, which offered a 2.875% coupon and priced at Treasuries plus 175bp. Samsung Electronics came well inside of that.
“No one is looking at Samsung as an emerging markets deal. It is pretty much a US-run deal and is in a different bucket from the likes of Kexim and KDB,” said one banker.
Samsung Electronics also priced well inside of the Korean sovereign, which has outstanding 2019s trading at Treasuries plus 150bp/160bp. But, according to the banker, the Korean sovereign was not considered a comparable for the deal. Instead, the key comparables included US high-grade chip makers such as Intel (A1/A+), Cisco (A1/A+) and Oracle (A1/A). The Intel 2016s were at Treasuries plus 34bp, the Cisco 2017s were at Treasuries plus 45bp and the Oracle 2016s were at Treasuries plus 30bp.
Bank of America Merrill Lynch, Citi, Goldman Sachs, J.P. Morgan and Samsung Securities were joint bookrunners for the offering.
Away from Samsung, a number of companies have completed roadshows, but deals have either been pulled or are waiting to materialise. Temasek-linked shipping company Neptune Orient Line called off its Singapore dollar-denominated perpetual late last week. In a statement to the exchange, NOL said it was postponing its issue to a time when the “market conditions are more conducive for a benchmark issue.” DBS was a global coordinator and bookrunner. HSBC, OCBC and Standard Chartered were joint bookrunners.
Vietinbank completed roadshows last week and the Vietnamese bank is planning a debut benchmark of about $300 million to $500 million, with a tenor of five or seven years. However, the deal has yet to print and, according to one source, the earliest it will launch is after the Easter holidays. Barclays and HSBC are the arrangers.
Mongolian private lender Xac Bank completed roadshows in London on Monday and is planning a debut dollar bond. ING and UBS are joint arrangers and initial whispers were 10% for a three-year bond. According to a source, given that most investors are away, the deal is slated for early next week.
Franshion Properties has also completed roadshows arranged by Deutsche Bank and Royal Bank of Scotland and the company is said to be "monitoring the markets."
Elsewhere, Beijing Enterprises Holdings has mandated Bank of America Merrill Lynch, HSBC and Morgan Stanley as joint global coordinators and bookrunners for a proposed dollar benchmark to be offered to US investors. DBS, ICBC International and Standard Chartered are also joint bookrunners. The deal will be launched following a series of investor meetings. The company is rated Baa1 by Moody's and A- by S&P.
