TOKYO, Oct 9 (IFR) - New issues dominated the Asian credit
markets today, as investors shrugged off widening synthetic
credit spreads and focused on putting their money to work.
With Citic Pacific drawing a stunning USD7bn in a book on a
USD700m deal, it would seem that investors have a risk-on tone
in the primary markets to spite a 1.5bp-2bp widening in the
The iTraxx Asia ex-Japan is wider at 130.33/132.67bp,
according to Markit, pushing out on news that the IMF had
downgraded the world growth's prospects to 3.3% and 3.6%,
respectively, for 2012 and 2013.
The mood has to take into account the renewed liquidity
injected back into markets after a holiday in Monday in Japan
and the US as well as the return of China markets after a
week-long holiday. With the market still flush with capital, new
issues will dictate the sentiment for the week.
"All eyes are on new issues with at least four live deals in
the market right now. The bid for paper, both primary and new
issue, remains overwhelmingly strong. The street doesn't have
many bonds to offer so new issues are the only game in town,"
said one credit trader.
Indeed, Citic Pacific's newly minted bonds from yesterday
traded up to 101 by the close of Asian hours, after opening at
100.4-100.5 on the break.
The Ba2/BB+ rated transaction itself saw 52% of its
investors as private banks, building up a massive USD7bn
orderbook to price the USD700m deal with a 6.6% yield at par.
The new bonds are quickly catching up to Citic's 2021s, which
were bid yesterday at 101-102 or a bid-side yield of about
"It's a great time to be an issuer - most recent deals have
priced well inside of initial guidance. So far, IG names have
dominated the primary issuance, but the conga line is forming in
HY. There is a massive supply/demand imbalance in Asian credit
right now and issuers of all stripes are very aware of this and
poised to take advantage," added the trader.
Hong Kong department store operator Lifestyle, rated
Baa3/BBB-, is set to price later today a 10-year USD Reg S deal
indicated at USD300m. Final guidance has been tightened at
UST+270bp +/- 5bp from initial +295bp on the back of a USD3.25bn
book. BofA Merrill, JP Morgan and StanChart are joint leads.
India's Syndicate Bank, rated Baa2/BBB-, is also in the
market with a 5.5-year Reg S deal with initial price thoughts
indicated at T+380bp area.
From the high-yield China property sector, Sunac China is in
the market with a 5NC3 Reg S trade. Initial indications were at
12.75%. It did not seem to have an adverse impact on the China
property space, suggesting there were no flippers.
Similar credits from Kaisa's (B1/B+) newly minted 2017s have
traded up to 103.50 or a yield of 11.91%, while the KWG
Property's (B1/B+) 2017 bonds were at 112 or a yield of 9.85%.
Using these as comps, the new Sunac deal seems to be offering a
good pick-up, with a book heard above UD800m on an expected
issue size of USD300m. The 25 cent rebate should help sweeten
the PB bid.
"Any new China property name coming to the market will have
to offer a 10% plus coupon," a Hong Kong based credit analyst
In Australia, mining giant BHP Billiton Finance Limited
(A1/A+/A+) has raised AUD1bn (USD1.022bn) from its first
Australian dollar denominated bond since 2001. The book was in
excess of USD2bn.
Nippon Life Insurance, the largest Japanese lifer, continues
its roadshow, to be concluded tomorrow, October 10, ahead of
releasing price guidance on its 30-year non-call 10 hybrid. The
144a/Reg S Global deal is expected to price later this week via
Citi and JPM.
With a subordinated structure United Overseas Bank is also
out for funding. UOB is marketing a capped USD500m LT2 deal with
guidance at UST+245bp area. Compared with its peers, the new sub
bonds could yield premiums of 15-20bp over DBS Bank's 3.625% due
2022, which are quoted at around 225bp (103.866 or G-spread of
214bp), and over OCBC Bank's 3.75% due November 2022 , which are
indicated at 230bp (103.995 or G+223bp). OCBC Bank's outstanding
3.15% due November 2023 are also quoted at 235bp over UST
(100.788 or G+225bp).
Elsewhere, CapitaMalls Trust, the subsidiary of
Singapore-based property company CapitalMalls Asia, has raised
JPY10bn from a 7-year Euroyen placement via HSBC. The proceeds
of the deal, which will close on October 15, will be swapped
back to SGD.
The property company has followed in the footsteps of its
peer Ascendas REIT which sold a JPY10bn 12-year bond in April at
2.55%, which also swapped the issue into SGD.