Emerging Asia Bond House: HSBC
In a year when Chinese issuers started to live up to their size and importance in the debt capital markets, HSBC came into its own, expanding its business into other parts of Asia and dominating a record year of US dollar issuance. HSBC is IFR’s Emerging Asia Bond House of the Year.
The year 2013 will go into the books not only as one of record issuance in G3 currencies for Asia excluding Japan and Australia, but also one in which Chinese issuers started to play in the big leagues.
It all started in unusual fashion. For the past decade, the first dollar bonds of the year were traditionally issued by one of South Korea’s policy banks, or by a sovereign – usually the Republic of the Philippines.
Not so this time. To the surprise of many, high-yield Chinese property developers kicked off proceedings in 2013. HSBC quickly caught on to the trend, leading (alongside Standard Chartered, UBS, Goldman Sachs and JP Morgan) a US$800m seven-year bond for Shimao Property Holdings in early January and then playing a part in a sequence of property-related China deals.
The bank, whose DCM team is led by Alexi Chan, featured in the line-up of bookrunners for almost every single deal from Chinese state-owned companies in 2013. Overall, it was a bookrunner for more than US$19bn in bonds from China.
These included the first multi-tranche deals by Chinese state-owned companies, such as the three, five and 10-year US$2bn bond transaction done by oil and gas company CNPC on April 9, which was followed by another multi-tranche US$1.75bn by Sinopec just a week later.
HSBC was also part of the first two deals out of Hong Kong in 2013, from Sun Hung Kai Properties and Hysan Development, proving that it still maintains its stronghold in what is in some ways its home market.
Increasing market share
But it also worked hard to expand beyond its captive markets. “We have demonstrated a very strong track record this year in Korea, for the first time we are at the top of the G3 league table for the country,” said Stephen Williams, head of capital financing for Asia-Pacific. “We have also done a lot of the ancillary transactions in Korea.”
Indeed, HSBC was one of seven shops leading Shinhan Bank’s five-year transaction in late January, the first one from a South Korean issuer this year in the US dollar market. The bank participated in a good chunk of the nearly US$20bn printed by Korean issuers in 2013.
According to a person close to the deal, it was HSBC’s ability to bring in large orders from key accounts that allowed the bank to claim a sole lead on a US$250m reopening of Korea Development Bank’s three-year bond in September. That deal came less than a month after HSBC acted as sole lead on Kexim’s US$300m tap of its 3.75% bonds due 2016s.
HSBC was also one of the six leads to be involved in the Republic of Korea’s return to the US dollar bond markets in September after almost a decade without a meaningful dollar deal from the sovereign. “HSBC showed they were able to bring key accounts to the conversation,” said the head of funding for a key borrower in Korea.
The bank showed the breadth of its business in Asia when it participated in the first US dollar transaction of the year for a Thai issuer, being one of the three banks leading Thai Oil PCL in its two-tranche deal in late January.
The bank also strengthened its position in other markets. “The Philippines might go unnoticed as we haven’t seen so much supply from the sovereign, but it was quite an interesting year for the corporate sector and I think that will continue now that they are fully investment grade,” said Williams.
HSBC was present in the sovereign deal done in November 2012, which achieved the tightest coupon to date for the Republic.
Then HSBC participated in the US$750m bond due 2023 by Philippines conglomerate JG Summit in January, which at the time was the largest corporate 10-year deal ever printed by a company from the country in the US dollar markets. It was also present on the US$750m perp of Petron Corp in late March.
HSBC excelled when it came to corporate hybrids. The bank was present in six of the nine perpetual corporate bonds priced this year, including Hutchison Whampoa’s euro-denominated transaction in May, the first such transaction by an Asian issuer.
The perps are perhaps a good metaphor to HSBC’s commitment to Asia. It is among the oldest banks in the region, and it plans to stick around for a long time.
To see the full digital edition of the IFR Review of the Year, please click here.
To purchase printed copies or a PDF of this report, please email email@example.com