Borrowers including Suhyup Bank, Cnooc and K Wah International started marketing dollar bond deals to investors on Wednesday as Asian credit markets tightened and sentiment was strong.
“I think there’s been a backlog of deals and borrowers are just taking money off the table while rates are low,” said one Hong Kong-based debt banker. “Plus equity markets haven’t been that great. I don’t think it’s sustainable but there’s plenty of liquidity in the system.”
Suhyup Bank on Wednesday night priced a $300 million five-year dollar bond at Treasuries plus 275bp, at the tight end of the final guidance of Treasuries plus 275bp to 285bp. The initial guidance was at the area of Treasuries plus 285bp and at that point, Suhyup Bank offered a pickup of about 20bp over NACF and the commercial banks in Korea. The NACF 2017s were at Treasuries plus 255bp, the Shinhan Bank 2017s at Treasuries plus 260bp and the Hana Bank 2017s at Treasuries plus 265bp.
However, the deal size came at the low end of the $300 million to $400 million indicative range. The bank was issuing off its medium-term note programme for the first time. Bank of America Merrill Lynch, Citi, ING, Royal Bank of Scotland and Standard Chartered were joint bookrunners. The issuer is rated A2 by Moody’s and A- by S&P. The coupon was fixed at 3.50% and the notes reoffered at 99.46 to yield 3.619%.
Suhyup’s bonds are implicitly supported by the government. “Suhyup’s A2 rating reflects its policy role of providing financing and support for developing Korea’s fisheries and maritime sector and, consequently, the government support that we expect it to receive,” says Hyun Hee Park, a Moody’s analyst in a report.
Also on early morning Wednesday, China’s biggest offshore oil and gas company Cnooc was in the market with a dual tranche 10- and 30-year dollar bond, each tranche of benchmark size. The initial guidance was in the area of Treasuries plus 210bp for the 10-year tranche and Treasuries plus 220bp to 225bp for the 30-year tranche. The Cnooc 2021s and 2041s were both bid at Treasuries plus 160bp. Barclays, BOC International and Citi were joint bookrunners.
K Wah International, the Hong Kong listed property flagship of the K Wah group, also opened books for its debut five-year benchmark on Wednesday and the deal is expected to price this week. The company was marketing the unrated bond at the high 5% area. Bank of America Merrill Lynch, DBS and HSBC are joint bookrunners.
A number of companies are on the road this week including Korea Western Power which has mandated Barclays, J.P. Morgan, Morgan Stanley and RBS to arrange investor meetings. China Merchants Holdings started fixed income investor meetings in Hong Kong, Singapore and London on Monday. The issuer is rated Baa2 by Moody’s and BBB by Standard & Poor’s. Bank of America Merrill Lynch, Deutsche Bank and Standard Chartered are joint arrangers.
