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Thursday, 23 November 2017

Asia-Pacific Loan House: Standard Chartered

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  • Consistent performance

In a challenging environment and in the face of stiff competition from the bond market, one bank stood out in 2014 with its smarter approach. For its track record of sole mandates and a diverse list of innovative deals, Standard Chartered is IFR’s Asia-Pacific Loan House of the Year.

Standard Chartered’s focus on serving Asian borrowers continued to impress. While rivals teamed up to form top-heavy arranger groups in the face of stiff competition and surging bond volumes, StanChart worked hard to generate money-making opportunities and support its clients without over-extending its balance sheet.

To do so, StanChart revamped its approach, focusing more on arranger fees than on interest income.

Banking on its ability to sell down underwritten positions, StanChart won several sole mandates and developed innovative structures, with a diverse roster of transactions from across the region.

Distributing risk was no mean feat in 2014, as distressed situations in China, regulatory pressure and higher funding costs in Taiwan dampened lenders’ appetite in North Asia, while South and South-East Asia faced political and economic uncertainty for the first six months of IFR’s review period.

Declining loan volumes as a result of competition from the booming bond market also added to the challenge.

“The year has been much more difficult to make money,” said Cristian Jonsson, global head of loan syndications at StanChart. “Syndication has become more important for the bank as the focus on originating to distribute has increased. As a loans business, we get paid to underwrite and distribute.”

The bank’s performance in China was spectacular, particularly as it came up with innovative structures to help lesser credits raise funds. The best example was a deal for Hebei Iron & Steel Group, where StanChart extended a US$150m three-year loan with a demand guarantee from Sinosure, and used that loan as collateral for a Dim Sum bond issue.

The quasi-securitisation structure allowed the bank to recycle its capital by transferring the risk to the capital markets, while the credit enhancement from a state-run insurer allowed it to provide cheaper funding to support an embattled Chinese borrower.

StanChart replicated the structure for other borrowers such as Zhongce Rubber Group, China’s largest tyre manufacturer, and Gluon Xima International, a unit of property developer Greenland.

StanChart also successfully syndicated credit-enhanced loans for TISCO Stainless Steel, Wugang Trading and Rongshi International Holding, while adding more sole-led deals to its roster with loans for Bosideng International Holdings, UniTrust Finance & Leasing Corp, GoerTek and Baoxin Auto Group.

The sole mandates for loans for Kingboard Laminates Holdings and Prosperity REIT in Hong Kong demonstrated StanChart’s capabilities in winning repeat mandates.

StanChart also led some high-profile acquisition financings, including a US$2.425bn 18-month bridge for HKT’s takeover of CSL New World Mobility, which was the largest sole underwriting in North Asia. The bank was also sole MLA on a S$1.25bn (US$1bn) loan supporting Singapore tycoon Ong Beng Seng and Wheelock Properties’ acquisition of Hotel Properties.

The lender’s performance in South and South-East Asia was equally impressive, with bookrunner roles on the up to A$2.6bn bridge for Frasers Centerpoint’s acquisition of Australand Property Group, the NZ$750m term loan for Philippines-based Universal Robina Corp’s takeover of New Zealand’s Griffin’s Foods, the US$830m-equivalent bridge and term loan acquisition financings for Indonesia’s Solusi Tunas Pratama, and a US$600m dual-tranche borrowing for Tata Motors.

StanChart innovated in this region too with a joint mandate on a US$350m revolver for Filipino port management company International Container Terminal Services, Asia’s first loan programme under bond-style documentation.

The bank also led several other high-profile financings in other geographies, including a good mix of foreign and domestic currency loans, for the likes of CT Corp in Indonesia (IFR’s Asia-Pacific Loan of the Year), Malaysia’s SapuraKencana Drilling, San Miguel in the Philippines, CP All in Thailand, and Macquarie and Lend Lease in Australia, among others. It also led a debut Islamic financing for Garuda Indonesia.

To see the digital version of the IFR Review of the Year, please click here.

To purchase printed copies or a PDF of this report, please email gloria.balbastro@thomsonreuters.com.

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