Equity-linked issuance was far from easy in 2014, but one bank delivered consistently across a wide range of markets. For its sound market judgment and for sticking by its clients, Credit Suisse is IFR Asia’s Structured Equity House of the Year.
Structured equity house
Two US-listed Chinese internet companies were planning to launch convertible bonds into a crowded market on the same day in December 2013. One wall-crossed investors, but decided to mothball the deal, while 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.
The move, while not the most auspicious start to IFR’s review period, 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 the 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 will have had first-hand knowledge of how far the bank was prepared to 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 standout deal from that sector was Qihoo 360.
Credit Suisse had not been involved in the internet security company’s 2013 deal, but was brought in on a far more challenging issue the following year. The issue was launched at a size of US$900m across two tranches and, in the end, both the six-year piece, with a put at the end of the third year, and the seven-year piece, with a put after year five, were set at US$450m. Splitting the issue into two tranches created price tension and also suited different types of investors, with hedge funds preferring the shorter tenor and outright investors the longer one.
The offering 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 CB a year earlier. Despite a selloff in US tech stocks and Argentina’s default during bookbuilding, both tranches priced at or around the midpoint 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 on record from an Asian company listed in the US. The tenors also helped to term out Qihoo’s debt profile.
In the US, Credit Suisse played pivotal roles in issuance out of China’s solar sector, working on offerings from Jinko Solar, Canadian Solar and Trina Solar. Trina added Credit Suisse when it came with its second offering of the year, an ADS, and replaced a zero-strike porton 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 Beijing Enterprises Holdings’ HK$4.3bn (US$556m) exchangeable bond, priced at a hefty 42.78% conversion premium , and on a chunky HK$3.9bn debut offering from Shenzhou International Group.
While Credit Suisse was on three of the four largest issues from Asian companies, it was equally comfortable bringing to market smaller issuers, 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) CB in September – the first zero-coupon paper 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.
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