Source: Reuters/Cheryl Ravelo
Philippine Finance Secretary Cesar Purisima gestures as he answers questions from businessmen. The Philippines has joined the many Asian issuers working on international bonds with plans for a US$1.5bn liability management exercise.
Bond sales have eased across Asia in a holiday-shortened week, but credit traders reported more buying interest than selling in the run-up to Friday’s non-farm payrolls report. That suggests investors are ready to absorb new supply as Asia adds to its already record tally of international bond offerings so far this year.
If market conditions allow it, that big figure may include US$1.5bn of bonds from the Republic of the Philippines, which is poised to announce a long-awaited liability management transaction before the end of this month.
The number also includes a list of five to seven investment-grade bonds, which could add up to some US$3bn or more. Origination bankers reported that a few high-grade names from China were lining up to launch sizable dollar bonds.
There are also expected to be Issues from South-East Asia. That may include a couple of banks from Thailand, after Tisco Bank and Krung Thai Bank were both rumoured last week to have mandated dollar bonds.
There was even talk that the two Thai banks were toying with the idea of subordinated bonds, in contrast with the senior unsecured paper that Siam Commercial Bank, KasikornBank and Bangkok Bank issued earlier this year.
It may also include more deals from Singapore and Malaysia, as banks in the two countries approach a looming deadline to issue cheaper old-style subordinated bonds.
Bankers remain hopeful of some new high-yield bonds, but these may be restricted to the offshore renminbi market, which seems to be more receptive to lower-rated issues right now than dollar investors.
A couple of Chinese property companies were said to be looking at the CNH market, planning to do transactions in the mould of a bond Beijing developer Gemdale priced earlier this year.
In July this year, Gemdale priced a Rmb1.2bn (US$191m) three-year Reg S bond to yield 9.15%. The bond included an unusual covenant structure that helped encourage more investors to invest in a Chinese property company, and which might have set a template for the other developers looking at CNH fundraisings.
Finally, more Indian companies are also expected to hit the tape in the wake of Indian Railway Finance Corp as they take advantage of lower withholding taxes after a rule change two weeks ago. The result of IRFC’s deal will be encouraging, as the Indian non-bank lender garnered a book of more than US$3.6bn for a US$300m deal.
Total activity for the rest of the month, however, will depend on how those new bonds perform in the secondary market, as well as global risk appetite.
Still, unless there is a major turn in sentiment, bankers expect October to become another US$10bn month for Asian G3 issues.
