IFR Special Reports

Weathering the storm

When the crisis began unfolding there was a sense that Asian banks were in a much better shape than banks elsewhere in the world. So far that has proved to be the case; at least up until June 2009. And while challenges remain, it looks likely to remain the case. Asian banks have fared quite well by almost any measure: capital adequacy, capitalisation, loan growth and profitability. “Asian banks are reasonably strong in terms of overall capital adequacy ratios, which are well into double digits in some cases,” said David Marshall, managing...Read more

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Smart shopping

Matahari Putra Prima is an Indonesia-based consumer goods company and the company and its subsidiaries operate department stores in 98 locations, and 78 permanent and 43 non-permanent family entertainment centres throughout Indonesia. The Lippo Group controls about 57% of the company. Citigroup and UBS managed a tender exercise for the company in June which involved the exchange of the company’s due 2009 paper into a new Reg S/144a 2012 global bond, and which featured a new-money component. The decision to take the 144a route enabled the...

Record-setting feat

Founded in 1982, the state-owned CSCE is now the largest construction enterprise and the largest international contractor in China, with property development and infrastructure construction as its core businesses. The company had been planning an IPO for years and finally made a significant step in June 2008 by winning preliminary approval from the regulator CSRC for a domestic listing. In China, listing candidates have to get two approvals – preliminary and final – before they can launch their offerings. The final approval did not come as...

Invigorating the bond market

While new issuance in most South-East Asian markets was throttled by the financial crisis during the first half of this year, Thailand’s liquidity-flush domestic bond market chugged along undeterred even in the face of political uncertainty. PTT took full advantage of this to meet most of its funding needs onshore. The onshore markets were conducive for bond issuance because deposit rates were dropping and investors were hungry for products that offered better yields. The oil and gas major, whose subsidiaries include PTT Exploration and...

Change of strategy

Olam is active in agricultural commodities. The company is the world’s largest supplier of cashew nuts and among the leaders in cocoa, cotton, teak and rice. Its model is to be involved across the supply chain wherever it is profitable to do so – from the farm gate to the consumer. It has done this so far with a very asset-light model, which works roughly like this: a predictable 2% net profit margin on an average of three times asset turnover, net debt equity of about three to one, equating to roughly 24% return on equity. The company’s CEO,...

Setting the standard

In April,Hutch reinforced its credentials as a street-smart market timer when it priced a US$1.5bn 10-year 144a/Reg S global via joint leads Deutsche Bank,HSBC and JP Morgan. As well as announcing and transacting the trade on the same day, Hutch managed to achieve a 12.5bp iteration from original guidance, in a pricing dynamic that resembled the kind of execution that issuers enjoyed in the days of the bull market 18 months ago. A hefty US$2.5bn book had been built in Asia before Europe came in with circles of around US$800m. That momentum...

Bold all the way

Strategic shareholders at the IPO included Temasek, Malaysia’s Robert Kuok, Citic Pacific, New World Development chairman Cheng Yu Tung and Henderson Land Development chairman Lee Shau Kee. Then there was a similarly ambitious, but wholly less successful, attempt to launch a US$1bn bond in October 2007, a deal whose failure also caused the axing of three other dollar bonds due to price that week. And this year it was back again, with a US$300m 144A/Regulation S five-year bond, subsequently increased to US$375m, that can stake a strong claim...

Establishing a benchmark

The first real signs that Suzlon, the world’s fifth-largest wind turbine maker, was in trouble came early 2009. After aggressive expansion fuelled by a rocketing share price and easy credit, the firm found itself overextended. After listing in 2005, the company embarked on repeated rounds of capital raisings followed by acquisitions, the most ambitious of which was its €1.3bn (US$1.7bn) payment for a stake in the German turbine company REpower. The company found it was overleveraged in a climate of closed capital markets and declining earnings...

Peso bond market steps up

Led by HSBC and the Development Bank of the Philippines, this was the largest local currency debt issue in Philippine pesos by a multiple of four – in the middle of a global financial crisis. And it was for a first-time issuer. But there was little to suggest that this deal could get away easily. The issue came about because of San Miguel Corp’s spin-off of its San Miguel Breweries (SMB) business. SMB is an iconic and powerful brand. “It’s obviously a hugely popular name, the largest in the Philippines, with a 95% market share, and the...

Shopping in style

The timing of Woolworths’ borrowing could not have been better. In early March when the deal was mandated to ANZ and Citigroup, credit market conditions were choppy with no clear indication of how deals would fare, let alone for a debut borrower like Woolworths. Yet, a couple of months later when the deal closed, Woolworths had managed to suck up liquidity in Asian loan markets and put its name on the regional map. The financing was increased to US$700m-equivalent from an originally planned US$300m three-year loan. In the process, Woolworths...

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