Serving up solutions
High offshore rates kept some companies away from the bond market, but one bank helped borrowers print in size, reviving Asian high-yield issuance and making ESG integral to its deals in the process. HSBC is IFR's Asia Bond House of the Year.
HSBC stood out as the best bond house in a year when deal volumes plummeted and risk appetite was in short supply. It not only worked on the most G3 currency deals in Asia-Pacific ex-Japan, but it also provided clients a variety of solutions to maximise investor demand and keep funding costs low.
“The trick in 2023 was staying relevant to issuers in a market where issuance volumes were falling in G3 currencies,” said Sean Henderson, co-head of Asia-Pacific debt capital markets. “HSBC’s unique platform, with an ability to execute across G3 and local currencies, has been key to staying in constant dialogue, and being able to advise clients on the best execution.”
Deal volume for G3 currency bonds from Asia-Pacific excluding Japan and Australia totalled US$145.9bn in 2023, coming in below even 2022’s muted volume of US$187.9bn as Chinese issuers stayed onshore and investors sought safe havens.
HSBC was number one in the G3 league table with more than US$13.7bn in volume and a market share of 9.4%, according to LSEG data. In a shrinking market, it added US$3.3bn of volume and 390bp of market share compared with 2022.
For HSBC the limited volume meant leaning into the bank’s many close relationships with borrowers in the region. “The depth of the client dialogue and our strong historical relationships have been key for successful deals,” said Henderson.
HSBC found a lead role on jumbo issues like Airport Authority Hong Kong’s US$3bn issue, CK Hutchison’s US$2.5bn Yankee and SK Hynix’s US$2.5bn offering incorporating green and sustainability-linked tranches. It brought the Philippines to market in January for a US$3bn offering including a sustainability tranche, then returned in November for the sovereign’s first sukuk issue.
The bank was not only a global coordinator and green structuring bank on the Hong Kong government’s US dollar, euro bond and renminbi bond sales, but also worked on Hong Kong’s debut green tokenised bond offering as a structuring bank and arranged its retail green bond.
Many of these deals drew on HSBC’s ESG capabilities, which were also demonstrated as it brought Export-Import Bank of Korea to the US dollar market for South Korea’s first blue bond and led Indonesia’s Pertamina Geothermal Energy to its debut offshore issue with a green offering. HSBC was also there when Hong Kong Mortgage Corporation sold a social bond in three currencies.
Given the uncertainty around US Treasury rate movements in 2023, HSBC was able to use its regional market capabilities to arrange alternative funding in local currencies when the G3 market was not the right option.
HSBC offered this diversified approach to South Korean borrowers, who proved to be some of the most active offshore. Korea Housing Finance Corp, for instance, worked with HSBC on US dollar bonds, a euro social covered note and an inaugural Australian dollar floating-rate covered bond. It was also a joint lead on the South Korean sovereign’s historic debut Samurai, and took Shinhan Bank to the Formosa market for a floating-rate social issue to tap liquidity from Taiwanese life insurers.
“We have been at the forefront of providing a full spectrum of financing solutions to borrowers in the region, such as private placements, local currency bond offerings and loans, in addition to public US dollar bonds,” said Daniel Kim, co-head of Asia-Pacific DCM.
In the financial institutions space, notable deals included China Taiping Insurance Holdings US$2bn subordinated perpetual bond and Bank of East Asia’s US$500m issuance under Hong Kong’s loss-absorbing capacity framework.
While high-yield bond issuance was muted, HSBC led two trades for Indian renewable companies – ReNew Energy’s market opening US$400m green bond and Continuum Green Energy’s US$435m issue – as well as two issues for Mongolia, both of which incorporated liability management exercises to address near-term maturities.
To see the digital version of this report, please click here
To purchase printed copies or a PDF of this report, please email shahid.hamid@lseg.com in Asia Pacific & Middle East and leonie.welss@lseg.com for Europe & Americas.
