In the most difficult of years for Asian bonds, HSBC worked hard to keep the international markets open for its Asian clients. It read demand dynamics to bring the right deal to market at the right time, and moved quickly to reopen issuance windows when sentiment changed.
HSBC led a string of sovereign issues from China, Korea, Sri Lanka and Indonesia, as well as deals for state-linked enterprises, but it did not shy away from a challenge, helping first-time issuers and lower-rated credits access the market throughout the year.
Notably, with 17 Asian G3 deals pulled during bookbuilding during IFR’s review period, HSBC had the best success rate of any of its peers, giving issuers confidence that they would be able to complete their trades without resorting to underhand tactics that were a feature of many Asian new issues in 2018.
HSBC handled 225 G3 bonds for Asian clients during IFR’s review period, including Australia but not Japan, almost 50% more than any other arranger. It topped the G3 league table with US$26.0bn of volume for a 7.6% market share, according to Refinitiv data.
The bank’s performance was all the most impressive given the change in management, with Sean Henderson and Sean McNelis taking over as co-heads of debt capital markets for Asia Pacific following Alexi Chan’s transfer to London.
Bond underwriters had to endure a rough year in 2018 as market conditions took a turn for the worse after February, but HSBC showed it was nimble enough to target opportunities that often proved short-lived.
In Singapore, its US$1.35bn trade for Temasek Holdings in July alerted the market to the clear appetite for long-dated paper from select issuers, laying the ground for deals to follow soon after at the same tenor from China Merchants Port Holdings and Singtel.
It did a similar thing in September, reopening the 30-year dollar market in Asia with a US$400m tranche as part of a US$2.4bn transaction for China Petrochemical Corp, to be followed by tranches at the same tenor from the Republic of Korea and the People’s Republic of China.
The bank was joint global coordinator for jumbo dual-currency deals from ChemChina and State Grid, as well as on Tencent’s US$5bn multi-tranche dollar deal which repriced the tech company’s curve tighter in January.
HSBC continued to demonstrate its strength with financial issuers. Among them, Woori Bank reopened the Asian offshore bank capital market in August with a US$300m Tier 2 offering, while Shinhan Financial Group’s US$500m Additional Tier 1 notes, the first such instruments to be issued offshore by a Korean financial holding company, achieved tight pricing despite being the first dollar AT1 issue in Asia Pacific this year.
In Singapore, HSBC brought United Overseas Bank to the 144A market in April for its first offering there, before taking it back to Europe for a €500m five-year covered bond in September.
It was ever-present in the challenging high-yield market, seizing on a period of calm in July after China announced policy easing to bring new trades from property developers, and even venturing into frontier territory for Development Bank of Mongolia’s first standalone bond, a US$500m five-year issue in October.
The bank used its reach to add diversity to the G3 market. HSBC helped bring Thai Exim to market for its dollar debut, making it the first Thai policy bank to issue offshore. This was followed by a US$1bn long-dated dual-tranche issue for Thai Oil, in its first dollar print since 2013.
HSBC also helped ensure Green and sustainable financing continued to bloom, with Green trades for the Indonesian sovereign, State Bank of India and Korea Hydro Nuclear Power, as well as a €925m issue from ANZ that was aligned with the UN’s Sustainable Development Goals.
Liability management was a key theme this year, and HSBC managed to convince new names like Indonesian state-owned electricity utility Perusahaan Listrik Negara and Philippine refiner Petron to incorporate tender offers as part of their primary issue strategies.
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