China’s Lufax Prepares to Meet Global Market
1 March, 2017
Why CLSA Had to Axe US Research
3 March, 2017Euromoney, March 2017
At what point does a boom become a bubble? The question needs to be asked in Asian high yield, where year-to-date issuance volumes are fast approaching the figure for the whole of 2016 in China and have already long exceeded it in India and Indonesia – after just eight weeks of the year, one of which was a write-off for Chinese New Year.
By February 15, Asian issuers had raised more than $6.6 billion in high-yield bonds, since when further issues have come from Xinyuan Real Estate, Qinghai Investment, Huawei (unrated), Future Land, Road King, Grand China Air (unrated) and the Mongolian sovereign.
International bankers are loving it. You can see relief in their eyes. Shoved indignantly down the league tables by mainland Chinese houses and their Hong Kong subsidiaries in recent years as China’s issuers have focused domestically, the return of high yield – in significant style, and with greater diversity than in years – has brought fees and activity to a previously tight-margin market. All of them talk of considerable pipelines across multiple locations.
But… at what stage do we become alarmed? For some in the market it has already happened. If you had to pick a moment, it would probably have been when Indonesian coal industry supplier Bukit Makmur Mandiri Utama (Buma) attracted a $2.2 billion book for a $350 million bond paying 7.75% for five year non-call three money on a deal whose coupon tightened by more than half a percentage point along the way – despite the fact that more than half of Buma’s revenues come from Berau Coal, which defaulted on its own bonds in 2015.
Read more? Full article: http://www.euromoney.com/Article/3666592/Asias-vibrant-high-yield-start-raises-fears-of-a-bubble
