In December 2013, two US-listed Chinese internet companies were planning to launch convertible bonds into a crowded market on the same day. One wall-crossed investors but decided to mothball the deal; the other – E-House – went ahead with its CB at a reduced size of US$135m, with Credit Suisse swallowing the majority of its fee to reoffer it at 97.5.
While not the most auspicious start to IFR’s review period, the move underlined the bank’s determination to keep a clean track record of printing every deal it brought to market – a theme that proved increasingly important in 2014. Credit Suisse worked hard to build trust with issuers, and those relationships paid off handsomely as the year progressed.
For example, when Chinese recruitment website 51job decided to tap the US equity-linked market in April, it added Credit Suisse to its bookrunning syndicate. This new mandate may have owed something to the fact that E-House’s chief operating officer is also a director of 51job, and had first-hand knowledge of how far the bank would go to support a deal. Under better market conditions, 51job sailed through with a US$150m deal.
Issuance from US-listed Chinese technology companies was a key theme for the year, with another offering from Soufun adding to Credit Suisse’s tally, but the stand-out deal from that sector was Qihoo 360. The transaction was launched at a size of US$900m across two tranches, and in the end both the six-year tranche with a put at the end of the third year and the seven-year tranche with a put after year five were set at US$450m. Splitting the deal into two tranches created price tension and also suited different types of investors.
The deal drew an order book of more than US$2.5bn from over 100 investors, and paid a coupon on the six-year tranche 200bp lower than Qihoo’s previous deal a year earlier. Despite a sell-off in US tech stocks and Argentina’s default during bookbuilding, both tranches were priced at or around the mid-point of guidance.
The bonds performed well enough for the leads to exercise the greenshoe in full and bring both tranches to US$517.5m, making it the largest international CB offering from Asia ex-Japan in four years, and the largest ever from an Asian company listed in the US.
In the US, Credit Suisse played pivotal roles in deals from China’s solar sector, working on transactions for Jinko Solar, Canadian Solar and Trina Solar. Trina added Credit Suisse for its second deal of the year, which came with an ADS offering and replaced a zero-strike facility from its earlier deal with a stock lending facility. This maximised proceeds from the equity portion and meant holders of the earlier bond could dip into the borrow facility to hedge.
Credit Suisse also maintained its presence in Asia, winning a coveted role on the HK$4.3bn (US$556m) exchangeable bond from Beijing Enterprises Holdings – priced at a hefty 42.78% conversion premium – and on a chunky HK$3.9bn debut deal from Shenzhou International Group.
While Credit Suisse was on three of the four largest issues from Asian companies, it was equally comfortable bringing smaller issuers to market, such as Kingdee and China LotSynergy. Credit Suisse also managed to bring a rare Thai deal to market, helping Bangkok Dusit Medical Services print a Bt10bn (US$311m) convertible bond issue in September – the first zero-coupon CB from a Thai issuer and the first structured with an asset swap, allowing investors to hedge their credit exposure.
It also ticked the Taiwan box with a role on Zhen Ding Technology’s solid US$300m convertible in June.
In Japan, Credit Suisse acted as joint bookrunner on a dual-tranche ¥80bn (US$691m) zero-coupon convertible for Toppan Printing in December 2013, the largest deal from Japan’s corporate sector in the calendar year.
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