Slow start to 2017 for new SGD issuance
Building on the sluggish end to 2016 (new SGD issuance was -55.9% lower year-on-year for 4Q 16), 2017 has started on a similarly slow note. As of 24 Jan 17, we've seen just three SGD issues launched so far in 2017, for a total issuance of S$895m. In comparison, the year-ago period saw S$2.44b of new SGD issuance, although the timing of the Lunar New Year may be a factor – the holiday period falls in January this year, while the 2016 Lunar New Year period was in the month of February.
Table 1: New SGD Issues (Year-to-date)
Bond |
Issuer |
Issue Size ('S$ m) |
Orderbook |
Initial Guidance |
Final Pricing |
|---|---|---|---|---|---|
Mapletree Treasury Services Limited |
625 |
>S$800m |
4.7% area |
4.50% |
|
GLL IHT Pte. Ltd (Guaranteed by GuocoLand Ltd) |
200 |
>S$300m |
low 4% |
4% |
|
KDB 2.01 01/26/20 Corp |
Korea Development Bank |
70 |
N.A. |
N.A. |
2.01% |
Source: Bloomberg, iFAST compilations |
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Decent performance for new SGD issues
As we've previously highlighted, weak issuance for 2016 (S$19.2b) contrasts with the estimated S$24.4b of SGD which could be taken out of the market this year (~S$14.45b maturing, S$9.95b expected to be called) may result in favourable market "technicals" – the shortage of outstanding bonds to buy may eventually result in a pricing "premium". While new issue demand in the SGD space has not been overwhelming (based on observed orderbooks for the larger MAPLSP 4.500% Perpetual Qsov (SGD) and GUOLSP 4.000% 31Jan2022 Corp (SGD) issues), the performance for the recently-launched MAPLSP 4.500% Perpetual Qsov (SGD) has been decent (+1.5%, currently quoted at 101.50/101.75), aided by a modest decline in rates so far in 2017 on the back of a weakening USD; at the time of writing, the GUOLSP 4.000% 31Jan2022 Corp (SGD)s are currently quoted at around par (issue price).
Busy month for Asia ex-Japan hard currency issuance
In contrast to the slow start for SGD issuance, Asia ex-Japan G3 currency bonds saw a hefty 126.8% year-on-year jump in primary market activity, with issuance primarily denominated in USD. Amongst the issuers in January were China/Hong Kong real estate firms (USD4.085b), whose issues saw robust demand (primarily from fund managers), allowing for a sizable tightening of pricing terms (see Table 2). Other sizable issues over the month include China Huaraong International's HRAM 3.375% 24Jan2020 Corp (USD) (USD1.1b) and HRAM 4.500% Perpetual corp (USD)s (USD1.5b), as well as Gohl Capital's GENTMK 4 ¼ 01/24/27 Corp (USD) (USD1b, with a Keepwell Deed from Genting Bhd).
Table 2: Selected Real Estate USD Issues
Bond |
Issuer |
Issue Size ('US$ m) |
Orderbook |
Initial Guidance |
Final Pricing |
Reoffer |
|---|---|---|---|---|---|---|
New Rose Investments Ltd |
200 |
>$1.5b |
4.875% area |
4.50% |
100.000 |
|
Shui On Development Holding Ltd |
500 |
>$3.3b |
6.25% area |
5.875% |
99.384 |
|
China Aoyuan Property Group Ltd |
250 |
N.A. |
6.75% area |
6.35% |
100.000 |
|
BJCAPT 3 ⅞ 01/25/20 Corp (USD) |
Central Plaza Development Ltd |
400 |
N.A. |
+285bps area |
+255bps |
99.720 |
Yanlord Land HK Co Ltd |
450 |
>$1.7b |
6.25% area |
5.875% |
100.000 |
|
Times Property Holdings Ltd |
375 |
>$2.3b |
6.625% area |
6.25% |
100.000 |
|
NEWWOR 4 ¾ 01/23/27 Corp |
New World China Land Ltd |
600 |
N.A. |
5.25% area |
4.75% |
100.000 |
CHJMAO 5 ¾ PERP Corp |
Franshion Brilliant Ltd |
500 |
N.A. |
5.95% area |
5.853% |
99.146 |
Yuzhou Properties Co Ltd |
350 |
N.A. |
6.5% area |
6.10% |
99.575 |
|
GZRFPR 5 ¾ 01/13/22 Corp (re-tap) |
Easy Tactic Ltd |
460 |
N.A. |
5.95% |
5.95% |
99.146 |
Source: Bloomberg, iFAST compilations |
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Busy month for Asia ex-Japan hard currency issuance
Other than the MAPLSP 4.500% Perpetual Qsov (SGD)s which are up by around 1.5% since issuance, the top-performing Asia ex-Japan G3 new issue for 2017 so far is the FWDINS 6.250% Perpetual Corp (USD) (+2.3%). As we identified in an earlier article (FWD Limited looks to issue new USD perpetual bonds), we felt that pricing for a PerpNC5 would likely be in the mid-5% area, and we were obviously surprised by the very-attractive 6.875% initial guidance. Not surprisingly, books were substantially oversubscribed, with the final orderbook reportedly over USD6.75b for the eventual USD250m issue. At current offer (102.50), YTC is around 5.67%, which is fairly close to our initial pricing thoughts on the issue.
One of the other top-performing new USD issues for 2017 is the NEROSE 4.500% 19Jan2020 Corp (USD), which is guaranteed by Hong Kong-listed real estate firm, SEA Holdings Limited. As per our comments on the new issue (SEA Holdings: Announces New 3Y USD Issue At 4.875% Area), we felt that SEA bonds offered good relative value vis-à-vis its Hong Kong real estate peers, sporting a strong "net cash" position yet offering a decent yield. Investors also agreed, with the final orderbook in excess of USD1.5b for the eventual USD200m issue size – pricing tightened from 4.875% (initial guidance) to 4.50%. Following the launch of the new NEROSE 4.500% 19Jan2020 Corp (USD)s, the bonds have gained 1.1% and are currently quoted at around 101.375 (4% YTM), which still represents a decent yield for the short tenor.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) has a principal position in NEROSE 4.500% 19Jan2020 Corp (USD). The analyst/analysts who produced this report holds/hold a NIL quantity in the securities mentioned in the report.
