Asian Issuers: Building blocks for the future

IFR Asia - Asian Issuers 2014
5 min read

People work at a brick kiln near Hlawga Village, 35km north of Yangon.

Asian Issuers: Building blocks for the future

Source: REUTERS/Soe Zeya Tun

People work at a brick kiln near Hlawga Village, 35km north of Yangon.

As Asia’s capital markets hurtle towards the end of another busy year, signs of the region’s maturity are becoming clearer. Deal volumes are up, as rising equity valuations and low borrowing costs lure more issuers into the financing markets. More importantly, the range of products is also growing as Asia’s markets become deeper and more sophisticated.

This year’s Asian Issuers Special Report showcases a group of issuers that have each completed landmark financings in recent months, whether they are seizing an attractive funding opportunity or pioneering a new asset class.

Taken together, the deals and companies showcased in these pages point to the tremendous development in Asia’s capital markets in recent years, painting an encouraging picture for the region’s future.

Asia’s international debt capital markets have welcomed several new products this year, including Green bonds and bank capital securities, while efforts to develop one of the region’s major local currency bond markets began to pay off in Australia with the arrival of more corporate and high-yield borrowers.

Taiwan’s Advanced Semiconductor Engineering became Asia’s first corporate issuer to announce a Green bond, also in July, raising US$300m of three-year money to reinforce its environmental credentials and pioneer the development of the new asset class.

China Citic Bank’s Hong Kong subsidiary launched Asia’s first Basel III-compliant Additional Tier 1 offering in US dollars in March, a crucial step towards the creation of a big new market with billions of dollars of Chinese bank capital already in the pipeline.

G8 Education returned to Australia’s underdeveloped high-yield bond market in March, before taking its story to Singapore in May and August, tapping high-net-worth investors in both markets and helping to deepen the region’s cross-border financing links.

National borders continue to come down, with Japan’s notoriously conservative fixed-income investors opening up to Asian issuers, the Chinese renminbi enjoying greater regional demand and several overseas borrowers turning to Singapore.

Malaysia’s biggest bank broadened its funding horizons this year with a pair of landmark issues in Japan’s fledgling Pro-Bond market. Maybank was also instrumental in opening the country’s local market for Basel III-compliant bank capital with Malaysia’s first Additional Tier 1 in September.

Political change proved no match for global credit bulls, and Thailand’s PTTEP showed it would take more than a military coup to dent confidence in one of the country’s premier corporate credits in June with a rare hybrid that arrived only weeks after the army seized power.

Pakistan returned to the global markets in April with its first sovereign bond in seven years, locking in US$2bn of essential funding in a surprisingly popular deal that paved the way for state equity divestments.

While high-grade bonds are undoubtedly becoming more commoditised, the growing global acceptance is also edging Asia’s frequent issuers towards developed-market status, bringing down borrowing costs for the region’s top companies.

The equity capital markets have developed, too, even if Asia’s biggest issuer of the year had to turn to a US exchange to complete its listing. The months-long frenzy surrounding Alibaba’s record IPO allowed a string of other Asian technology companies to tap into surging demand for the sector, while the pipeline elsewhere is building again following political upheaval across much of South and South-East Asia.

Singapore’s biggest IPO of 2014 so far has come from an unlikely sector, with Accordia Golf completing a US$600m business trust listing in July. As well as the unique golf angle, the deal cemented links between Japanese issuers and South-East Asia’s capital markets following last year’s Singapore debut of Croesus Retail Trust.

Qihoo 360 Technology completed Asia’s biggest convertible bond of the year in July, raising over US$1bn and clearing the market well in advance of Alibaba’s New York debut.

In India, the landslide election victory for Narendra Modi opened the door for the previously unloved Reliance Communications to raise close to US$800m from an institutional share placement – the country’s biggest corporate share sale post-election.

These case studies, together with many other landmark transactions completed in recent months, paint an encouraging picture for Asia’s capital markets. As financing opportunities within the region continue to grow more diverse, the experiences outlined here are sure to pave the way for more to follow.

To see the digital version of this report, please click here.


Asian Issuers: Building blocks for the future