Asian primary debt market recovering<\/p>\n
HONG KONG (Dow Jones): The Asian primary debt market came
\nalive last week with three major deals out of the Philippines,
\nHong Kong, and Indonesia.<\/p>\n
After a dull start to the new year, market participants were
\npleased to see just over US$3 billion in new paper emerge from
\nthe region. Hopes are the momentum will continue, with two more
\ncorporates tapping the overseas markets this week.<\/p>\n
The Philippines' global bond pricing late Friday was the most
\nwidely watched, coming just on the heels of a corruption scandal
\ninvolving the local stock market. The launch and pricing of the
\ntwo-tranche offering were delayed by one day due to the
\ncontroversy, which sent the stock market lower by 6.7 percent in
\nfour days.<\/p>\n
In the wake of the scandal, secondary spreads on outstanding
\nPhilippine bonds widened significantly, which meant cheaper
\npricing - and more investor demand - for the new global.<\/p>\n
The new issue ultimately was raised to $1.6 billion from the
\n$1.2 billion amount initially planned. The two-tranche offering
\ncomprised a $600 million 10-year tranche that was priced at 350
\nbasis points over Treasurys with a yield of 9.883 percent, and a
\n$1 billion 25-year tranche priced at 440 basis points and a yield
\nof 10.698%. The deal was lead-managed by Lehman Brothers.<\/p>\n
U.S. accounts comprised 50 percent of the issue, while the
\nrest of the investor base was evenly split between European and
\nAsian accounts.<\/p>\n
By Monday midday, spreads on the 2010 had narrowed to 346-342
\nbasis points; and the 2025 had tightened to 427-424 basis points,
\naccording to data from asiabondportal.com.<\/p>\n
The bond issue's debt exchange and tender component, totaling
\n$269 million, allowed investors to swap outstanding bonds from
\nthe National Power Corp. for the new securities.<\/p>\n
Also Friday, Hong Kong's Kowloon Canton Railway Corp. sold $1
\nbillion of 10-year global notes yielding 168 basis points over
\nTreasurys, in its first global bond issue and second U.S. dollar-
\ndenominated offering.<\/p>\n
Asia-based investors said the deal had to be sweetened from
\nmarket expectations of 150 basis points, as investors are
\nfavoring higher-yielding paper at the moment.<\/p>\n
The deal was 25 percent oversubscribed, with 40 percent going
\nto U.S. investors, 35 percent to Asia and the rest to Europe.
\nMorgan Stanley Dean Witter and HSBC Securities were joint
\nbookrunners.<\/p>\n
Because the deal was sold mostly to buy-and-hold investors,
\nKCRC '00 was barely moved at 168\/165 basis points midday Monday,
\naccording to asiabondportal.com.<\/p>\n
APP China, a unit of Indonesia's Asia Pulp & Paper group, last
\nweek tapped targeted high-yield U.S. investors in Indonesia's
\nfirst overseas issuance since the crisis.<\/p>\n
The 10-year issue, non-callable for five years with detachable
\nwarrants, was increased to $403 million from the initial $350
\nmillion, getting a boost from Moody's upgrade of the APP group to
\nthe B3 sovereign ceiling. The APP China debt will be guaranteed
\nby the parent holding company, which has significant Indonesian
\nexposure.<\/p>\n
The company priced the issue with a 14 percent coupon at
\n86.866 to yield 16.75 percent. Morgan Stanley Dean Witter was
\nlead manager.<\/p>\n
Roadshows for two more debt issues are kicking off this week.
\nKorea Electric Power is planning a $500 million five-year global,
\nfor which Merrill Lynch and Deutsche Bank are lead managers.<\/p>\n
Pricing is expected around 15 basis points over Korea
\nDevelopment Bank 2004, which midday Monday was indicated at 150
\nbasis points over U.S. Treasurys.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asian-primary-debt-market-recovering-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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