Equity House: Morgan Stanley

Asia’s primary bond markets started 2020 on a tear, before issuance ground to a halt in mid-March as global markets plunged because of the novel coronavirus pandemic. In late March and April, Asian high-grade issuers took their first steps into a fragile market – one where new issue concessions were essential. As confidence grew, high-yield issuance returned and new deals pushed out to longer tenors, but it took a skilled arranger to balance the needs of issuers and investors. HSBC, which in 2020 created a strategic solutions group to advise...

AIA Group led Asia’s insurance sector into a new regulatory era with a groundbreaking subordinated bond that set the template even before the final capital rules were introduced. The Hong Kong-based, pan-Asian insurer in September launched a US$1.75bn 20-year subordinated note which was its largest US dollar bond and first capital security. The timing of the deal was significant. AIA structured the notes to qualify as Tier 2 capital under Hong Kong’s Group-Wide Supervision framework, even though the regulation is not due to take effect until...

The Kingdom of Thailand sold its inaugural sustainability bond in August, in a rare syndicated deal that showed its commitment to environmental and social initiatives and was warmly received by global investors. The Bt30bn (US$997.6m) bond was initially envisaged as a green bond to raise funds for a Bt113.3bn electric mass rapid transit project, before it was expanded to include social bonds to support a Bt1.9trn Covid-19 stimulus package targeting public health and small businesses and people affected by the outbreak. Those two elements were...

BNP Paribas took up the challenge of promoting a green and sustainable recovery across Asia in 2020. It helped clients respond to the coronavirus crisis by accessing a growing pool of sustainable liquidity. It expanded the use of sustainability-linked pricing to new industries and asset classes and captured growing interest in social instruments to promote financial inclusion in markets such as India. The bank’s work on transition finance was especially impressive. It introduced innovative instruments to encourage real progress and helped...

Indonesia’s Star Energy Geothermal (Salak-Darajat) pushed the boundaries with a sought-after green bond in early October that revived Asia’s brownfield project bond market and positioned the Asian infrastructure sector to benefit from surging global demand for green assets. A US$790m 18-year non-call nine bond, which starts amortising from year nine and has a weighted average life of 14.1 years, was subscribed over 3.5 times after it was marketed to global investors. A US$320m 8.5-year non-call 3.5 bond was pre-placed with anchor demand at a...

The most impressive Asian high-yield bond of 2020 has already been redeemed. Though short-lived, Vedanta Resources’ US$1.4bn benchmark was a bold deal that raised the bar for Asian acquisition financing. In August, the Indian miner sold US$1.4bn of amortising three-year non-call two senior bonds to help fund a buyout of minority shareholders in its 50.1%-owned listed subsidiary Vedanta Limited. Investors had long called for the group to streamline its corporate structure so that cash could flow more easily up to the holdco to service debt....

Deutsche Bank showed its commitment to issuers across Asia in 2020 with an unrivalled collection of high-yield offerings in the most challenging of circumstances. After the coronavirus took hold, it delivered crucial funding for hard-hit companies from India to Macau. It helped reopen the Chinese high-yield market and gave investors options beyond the property sector. And it developed the asset class with acquisition financings and green bonds. “High yield is not a science, it’s an art,” Haitham Ghattas, head of capital markets for Asia Pacific...

Standard Chartered stuck by its clients and stepped up its focus on distribution in 2020, weathering the Covid-19 crisis with a series of bold calls that showcased its ability to read the market. The coronavirus outbreak hit Asia’s syndicated loan market hard, as nervous banks pulled back liquidity to focus on managing their existing portfolios and supporting core clients. StanChart rose to the challenge. Its commitment to clients and ability to underwrite crucial financings won it an unrivalled list of sole mandates in 2020. It also managed...

CP Group completed Thailand’s largest loan and one of Asia’s most widely syndicated financings in the midst of the Covid-19 pandemic, sealing a mammoth US$7.2bn-equivalent bridge loan to fund its purchase of the Asian business of British supermarket chain Tesco. Few would have predicted a final tally of 36 banks when joint underwriters JP Morgan, Siam Commercial Bank and UBS first approached the market in mid-March, when the global financial markets were reeling from the systemic shock of Covid-19. Thai billionaire Dhanin Chearavanont’s CP...

Alibaba Group’s Hong Kong listing, completed at the back end of 2019, was a defining moment for the global capital markets. The HK$101.2bn (US$12.9bn) offering brought the Chinese e-commerce giant closer to its customer base and introduced hundreds of thousands of new investors to the stock. More importantly, it gave Alibaba an alternative funding platform and reduced its dependence on the US equity market, neutralising threats from hawkish US politicians looking to curb the flow of capital to Chinese companies. Alibaba’s move also...

Goldman Sachs was at the forefront of a wave of equity-linked offerings in Asia in 2020, leading seven of the eight largest transactions during IFR’s review period. It pushed the envelope across multiple markets and products, particularly for US-listed Chinese issuers and those in the technology, media, and telecom (TMT) sector. The equity-linked product played a key role in 2020, helping deliver growth capital to Asia in the midst of tremendous volatility. “When things are upside down in the world, you have to be outwardly focused and in front...

A well-timed, swiftly executed S$850m (US$630m) convertible bond helped re-establish Singapore Airlines as a blue-chip issuer and reduce its dependence on state support. Like all airlines, SIA was battered by the collapse in passenger traffic as a result of the Covid-19 pandemic. Singapore’s flag carrier lost S$3.47bn in the six months to September 30, compared to a net profit of S$206m over the same period in 2019. It had turned to controlling shareholder Temasek Holdings in May to raise S$8.8bn from a rights issue that was wholly underwritten...