High-Yield Bond House: Credit Suisse

Still out in front

In a record year for Asian high-yield issuance, one bank combined connections and capabilities to deliver quality deals across the credit curve. For its unrivalled breadth and depth, Credit Suisse is IFR Asia’s High-Yield Bond House of the Year.

Credit Suisse remained the one to beat in Asian high-yield bonds in 2019, with an unmatched book of business across multiple countries and industry sectors. It was the top international underwriter of high-yield financings for Chinese property companies – by far the biggest segment of the Asian market – and led the way in originating new issues from other parts of the region.

As market sentiment rebounded early in the year, Credit Suisse helped Chinese developers act quickly to take advantage of the first market window in months. Issues in early 2019 were frequent and modest in size, to avoid overwhelming the secondary market, as the bank tried to avoid the bad practices seen in offerings by other bookrunners last year.

“We are proud of our credibility in the market and will ensure we fiercely protect our reputation and franchise to continue our leading position in high yield,” said Derek Armstrong, head of Asia Pacific debt capital markets at Credit Suisse.

The bank helped Kaisa Group Holdings rebuild trust with international investors following its 2015 default with a series of trades during IFR’s review period. After printing in the Reg S market, Credit Suisse then helped Kaisa expand its investor base with a rare 144A offering, the first from the China property sector since 2014.

While most issues from the Chinese property sector came in modest sizes this year, CS helped bring China Evergrande Group to market with US$1bn and US$3bn multi-tranche taps of its senior notes, as well as a US$2bn multi-tranche new issue when the market was more buoyant.

Given the upcoming refinancing needs in the Chinese offshore bond market, liability management came into play, with exchange offers for Modern Land and Car Inc, plus a tender offer and concurrent new issue for rare Chinese high-yield technology credit 21Vianet.

As the market warmed up after further US rate cuts, Credit Suisse tested appetite for longer maturities, as well as for more esoteric credits from around the region.

The Swiss bank was sole global coordinator in January when first-time issuer Mongolian Mortgage Corp printed a US$250m three-year issue, one of many debuts the bank led this year. When the bond traded well and markets strengthened, the issuer tapped it for a further US$50m.

In Malaysia, it brought a rare US dollar high-yield sukuk from Double B rated Serba Dinamik Holdings, with the oil and gas services company making a successful debut at a time when other issuers in the same industry were finding market conditions tough.

“We run a very strict execution process on our bond deals especially when it comes to pricing and allocation to quality investors, as that separates the good and not-so-good deals and affects secondary bond performance,” said Terence Chia, head of Asia Pacific debt syndicate.

In South Asia, the bank helped India’s Adani Green Energy raise US$500m and renewable energy company Azure Power sell US$350.1m of green bonds, as well as bringing SriLankan Airlines to market with a government-guaranteed offering.

One of the most challenging trades came late in IFR’s review period, when Chinese conglomerate Fosun International priced its euro debut, the first senior unsecured deal in the currency from a Chinese high-yield issuer. Without a sizeable Chinese offshore bid for euros, the success of the deal was dependent on truly broadening the company’s investor base.

CS had previously helped to bring Fosun to the US dollar market, where it printed a US$700m deal in June and tightened a hefty 37.5bp from initial guidance.

The two trades highlighted how the bank was able to find the right fit for issuers to meet changing market conditions, and deliver solid performance for investors into the bargain.