Nimble under pressure
As global financial markets struggled under the impact of geopolitical and macroeconomic factors in 2022, one bank remained nimble enough to navigate the challenges. For underwriting event-driven financings, delivering innovative solutions to borrowers and achieving breakthroughs in distribution, HSBC is IFR’s Asia-Pacific Loan House of the Year.
As demand for capital from borrowers declined and risk-aversion set in among lenders, Asia-Pacific lending volumes remained sluggish for the best part of 2022. Those factors increased the significance of access to liquidity, which HSBC was able to resolve for many clients, especially financial sponsors engaged in leveraged buyouts and dividend recapitalisations.
“HSBC has once again stepped up to support our clients in navigating uncertainties ... to provide tailor-made solutions for clients’ financing needs,” said Ashish Sharma, the bank’s head of loan syndications for Asia-Pacific.
HSBC’s performance was encapsulated by its lead-left role on a US$605m sustainability-linked acquisition financing for The Carlyle Group’s LBO of China's HCP Packaging. The borrowing, comprising first and second-lien tranches, closed successfully in August to become the first US-style covenant-lite term loan B to be entirely distributed in Asia (excluding Australia). A dozen lenders joined in syndication, including two non-banks.
The successful outcome was more significant given the dislocated state of the US TLB market as a result of Russia’s invasion of Ukraine in February. A week prior, HSBC, as one of the arrangers, had printed two TLBs – a A$1.065bn borrowing backing Swedish private equity firm EQT’s LBO of a majority stake in cancer care provider Icon Group, and a US$1.02bn loan for Baring Private Equity Asia’s acquisition of business services provider Tricor Group. The former financing represented the largest Australian dollar standalone TLB, while the latter marked Hong Kong’s biggest such financing.
HSBC also was one of the bookrunners on a A$1.925bn loan backing New Zealand's Morrison & Co and a unit of Canada's Brookfield Asset Management's acquisition of Australian telecoms company Uniti Group. The bank also helped channel Asian liquidity to US semiconductor packaging and testing outfit Amkor Technology’s US$600m revolving credit facility in March, which drew two dozen lenders in syndication.
“As a truly diversified, global loan house, 2022 saw HSBC put the full suite of debt solutions to work, including bank debt, institutional TLB and private credit, driving the increasing acceptance of TLB in the Asia market and successfully connecting Asian liquidity with the US and European markets to facilitate landmark cross-border transactions,” said Rachel Watson, HSBC's co-head of leveraged and acquisition finance, APAC along with Sharma.
The bank’s domestic currency and sustainability financing capabilities came to the fore in a US$639.6m-equivalent management buyout loan completed in April for BPEA and contact lens maker Ginko International's major shareholders. It was Taiwan’s first leveraged financing since June 2019 and the first from the island linked to ESG metrics.
Other successfully syndicated ESG financings HSBC led during the year included green loan for Australia’s Walker Corp (A$1.12bn), China’s JD.com (US$2bn) and Vietnam’s Vingroup (US$500m), and sustainability-linked loans for Hong Kong’s Link REIT – at HK$12bn (US$1.53bn) it was the largest SLL from the property sector in Asia – and a HK$4bn SLL for West Kowloon Cultural District Authority.
The latter SLL was the first such borrowing for an arts and cultural institution in Hong Kong. Other debut financings for Asian borrowers during the year included a US$700m borrowing for the take-private of gaming hardware maker Razer from the Hong Kong Stock Exchange in May, a US$2.1bn term loan for Macquarie International Finance and a US$1.2bn deal for Chinese smartphone maker Oppo.
The bank also bagged sole bookrunner or coordinator mandates from diverse borrowers such as Shenzhen-listed Digital China Group, Hong Kong-listed waste-to-energy enterprise Canvest Environmental Protection Group, ICBCIL Finance, a wholly owned subsidiary of ICBC International Leasing, and Hong Kong-based Jacobson Pharma.
HSBC also jointly led several loans for top-tier and high-profile borrowers such as Chinese online travel giant Trip.com and Vietnam’s Masan Group, with the latter raising its largest, longest and cheapest syndicated loan in a deal that drew 37 lenders in general syndication.
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