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. HSBC is IFR Asia’s 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 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,” said Sean Henderson, co-head of Asia Pacific debt capital markets at HSBC. “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 Asia Pacific ex-Japan G3 currency bonds totalled US$212.4bn in 2023, coming in below even 2022’s muted volume of nearly US$252bn as Chinese issuers stayed onshore and investors sought safe havens.
HSBC was number one in the league table for Asia Pacific ex-Japan G3 currency bonds with more than US$18bn in volume and a market share of 8.5%, according to LSEG data. In a shrinking market, it added US$2.9bn of volume and 2.5 percentage points 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 the 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 Republic of 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 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, 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 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 APAC DCM.
In the financial institutions space, notable deals included China Taiping Insurance Holdings’ US$2bn subordinated perpetual bond and Australia and New Zealand Banking Group’s €1bn (US$1.1bn) green Tier 2 notes, the first callable Tier 2 issuance from a Big Four Australian bank since APRA had raised uncertainty about whether financial institutions would be allowed to call capital notes if they faced higher costs to refinance them.
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.
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