The Week that Was - Mon, April 25 2002

IG Financials dominated the China US$ primary market last week and were met with good demand, both fixed rate deals trading 10bps tighter on Friday. Great Wall AMC priced US$500mm of 3yr bonds at T3+145, 45bps tighter than the initial price talk, which then proceeded to do well in the secondary market. Bank of China Singapore issued US$500mm 3yr Green bonds at T3+45 while BOC Macau Branch went for a US$1bn floating rate note at SOFR+78.

Nanyang Commercial Bank priced what is only the second US$ Additional Tier 1 bond in APAC this year. The $650mm junior subordinated paper, a perpetual with no call before 2027 (PerpNC5), came at 6.5%, which was wider than the HK bank curve and more in line with the AT1’s issued by Nanyang’s parent Cinda’s. Moody’s assigned the bonds a Ba2(hyb) rating.

A China ZheShang Bank’s stand-by letter of credit (SBLC) was used to support Sino-Ocean Land $200mm 3.8% 26/4/25 green bonds. SBLC’s are letters of credit or guarantees in favour of the trustee of a bond as the beneficiary, which makes the SBLC issuing bank jointly and severally liable for the payment of principal and interest upon the bond’s maturity date. This could usher in a slew of similar issuance.

Bloomberg reported that China’s state energy companies CNOOC, CNPC and Sinopec were jointly discussing purchasing Shell’s stake in the Russian Sakhalin-2 venture. The market didn’t really react, believing that the US would not apply sanctions on Chinese SOEs over a transaction that facilitates a European company’s divestment of Russian assets at this moment; needs to be watched

In the LGFV space, Chongqing Energy filed for bankruptcy last week. The LGFV has no outstanding issues, pre-paying its only US$ bonds due March 2022 back in November 2021 following an initial default in March 2021. This maybe a sign of a more selective support by Chinese local governments for their local government funding vehicles going forward.

Away from China: Sri Lankan officials met with IMF this week to discuss various programs, although a prerequisite will likely require a sustainable plan for its debt. The Maritime Gateway also reported that the government may explore leasing or selling significant assets to raise up to USD8bn to replenish foreign reserves.