Bank of China Debt Capital Markets Capabilities Market Outlook 2020 - Bank of China Limited January 2020
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PRIVATE & CONFIDENTIAL
Bank of China Debt Capital Markets Capabilities
Market Outlook 2020
Bank of China Limited
January 2020
0
Content
BOC Capabilities 2
Market Developments and Outlook 9
Case Studies 20
DCM Team 54
Green Bond Developments 56
1
Experience and Capabilities - Top Asian Debt Capital Market Franchise
EM Bonds 2019 League Table (bln USD)
Bookrunner Rank Vol Issues
Global coverage with DCM Centre established across key financial centers – Beijing, Hong Kong, Singapore and London. Bank of China 1 89.4 646
Citics 2 69.2 575
Coverage
Global footprint with diversified investor base and solid relationship with major global investors who could provide
Global
ICBC 3 66.1 482
supportive anchor orders, especially in Asia.
China Securities 4 64.7 577
Strong support from in-house investment book with a potential credit line for corporate names. Citi 5 62.2 451
HSBC 6 61.7 581
Strategy partner in RMB transactions. Guotai Junan 7 54.5 525
Asian top underwriter for G3 issuance, and the only leading underwriter in both China Onshore and Offshore market. JP Morgan 8 51.6 346
CICC 9 48.3 350
Standard Chartered 10 43.5 440
2019 2019 2019 2019 2018 2018 2018 2017
Transactions
EUR
Logicor Financing CPI Property SA PPF Arena 1 CEZ Group EP Infrastructure Agricultural Development
Ministry of Finance of the EUR 500 million due 2022 Bank of China Luxembourg
People’s Republic of China EUR 1,850 million EUR 550 million EUR 550 million Senior Unsecured Bond EUR750 million
Senior Unsecured Bond Subordinated Bond Senior Unsecured Bond Co-Manager Senior Unsecured Bond EUR 500 million EUR 2 billion
EUR 4 billion Multi-tranche Joint Bookrunner and Joint Joint Bookrunner and Joint Joint Bookrunner and Joint Joint Bookrunner and Joint Green Bond Senior Unsecured Bond
Eurobond Lead Manager Lead Manager Lead Manager Lead Manager Joint Global Coordinator, Joint Global Coordinator,
Joint Bookrunner and Joint Joint Bookrunner and Joint Joint Bookrunner and
Lead Manager Lead Manager Joint Lead Manager
2019 2019 2019 2019 2019 2019 2018 2018
Transactions
\
RMB
Veolia CASA CDP BMW Finance NV United Overseas Bank New Development Bank Hungary The Emirate of Sharjah
RMB 1 billion 1 year RMB 1 billion 3 year RMB 1 billion 3 year RMB 6.5 billion 1/3 year RMB 2 billion 3 year RMB 3 billion 3/5 year RMB 2 billion Panda Bond RMB 2 billion Panda Bond
Panda Bond Panda Bond Panda Bond Panda Bond Panda Bond Panda Bond after RMB 1 billion in 2016 Lead Bookrunner and Lead
Lead Bookrunner and Lead Bookrunner and Lead Bookrunner and Lead Bookrunner and Lead Bookrunner and Joint Lead Bookrunner and Lead Bookrunner and Lead Manager
Lead Manager Lead Manager Lead Manager Lead Manager Lead Manager Joint Lead Manager Manager
2019 2019 2019 2018 2018 2017 2016 2016
Transactions
USD
Republic of Philippines Sinopec CNOOC Ministry of Finance of the Saudi Arabia Ministry of Finance of the Saudi Arabia China Development Bank
USD 2 billion Multi-tranche USD 1.5b Multi-tranche People’s Republic of China People’s Republic of China USD 1b/ EUR 1b (Jan )
USD 1.5 billion Senior Unsecured Bond Senior Unsecured Bond USD 11 billion Multil-tranche USD 17.5 billion Multil- USD 1.6b /EUR 1b (May )
Senior Unsecured Bond Joint Global Coordinator, Joint Global Coordinator, USD 3b Multi-tranche Senior Senior Unsecured Bond USD 2b Dual-tranche Senior tranche Senior Unsecured USD 1.5b (Jun )
Joint Global Coordinator, Joint Bookrunner and Joint Joint Bookrunner and Joint Unsecured Bond Joint Bookrunner and Joint Unsecured Bond Bond USD 350m/ EUR 500m (Oct )
Joint Bookrunner and Joint Lead Manager Lead Manager Joint Global Coordinator, Lead Manager Joint Global Coordinator, Joint Bookrunner and Joint Joint Bookrunner and Joint
Lead Manager Joint Lead Manager Joint Lead Manager Lead Manager Lead Manager
2
Source: Bloomberg as of 06 Jan 2020 *in Bold selected EMEA transactions
Credentials - Growing Market Presence
Bank of China has Asia ex-Japan G3 Currency League Table 2013 (bln USD) Asia ex-Japan G3 Currency League Table 2019 (bln USD)
improved its Asia ex-
Japan G3 Currency Bookrunner Rank Vol. (bn USD) Issues Bookrunner Rank Vol. (bn USD) Issues
League Table Position HSBC 1 15.4 139 HSBC 1 28.6 323
from no. 10 in 2013 to Deutsche Bank 2 11.9 107 Standard Chartered 2 18.6 234
Citi 3 11.2 100
top 4 in 2019; and ranks Citi 3 16.2 177
Goldman Sachs 4 10.9 59
no 2 in Offshore China Bank of China 4 15.5 264
JP Morgan 5 10.7 87
Bonds in 2019, with 5x Standard Chartered 6 9.6 74
JP Morgan 5 11.0 129
of underwriting volume UBS 6 10.4 143
UBS 7 8.9 87
since 2013. Bank of America Merrill CACIB 7 10.4 99
Lynch 8 7.9 73 Credit Suisse 8 10.2 130
Barclays 9 6.9 56 Haitong Securities 9 9.8 197
Bank of China 10 5.1 58 Deutsche Bank 10 9.4 116
2013 2018/2019YTD
Offshore China Bonds League Table 2013 (bln USD)*
Offshore China Bonds League Table 2019 (bln USD)*
Bookrunner Rank Vol. (bn USD) Issues
Bookrunner Rank Vol. (bn USD) Issues
HSBC 1 9.5 176
HSBC 1 33.1 612
JP Morgan 2 8.6 106 Bank of China 2 21.8 491
UBS 3 8.3 205 CACIB 3 17.9 383
ICBC 4 7.3 87 Nomura 4 17.1 654
Goldman Sachs 5 6.7 58 UBS 5 11.1 207
Standard Chartered 6 6.6 142 DCS Group 6 10.9 227
Citi 7 6.5 101 Haitong Securities 7 10.2 244
BGC Partners LP 8 5.6 35 Scotiabank 8 10.2 303
ICAP 9 5.6 54 Bank of Comms 9 10.0 215
Bank of China 10 4.7 95 CCB 10 9.7 243
Source: Bloomberg, 07 Jan 2020 * Chinese issuers in G3 currency
3Bank of China is the Leading Panda Bond House
Issuer Name Deal Eff Date Cpn Amount Issued Curr Maturity Series
League Table: Veolia 17/12/2019 3.70 1,500,000,000 CNY 17/12/2020 PPN
Panda Bond Issuance 2019 Credit Agricole 04/12/2019 3.40 1,000,000,000 CNY 05/12/2022
Daimler AG 13/11/2019 Multi 5,000,000,000 CNY Multi PPN
Bookrunner Rank % BMW Finance NV 21/10/2019 Multi 3, 000,000,000 CNY Multi PPN
Bank of China 1 45.73 Daimler AG 12/08/2019 Multi 5,000,000,000 CNY Multi PPN
ICBC 2 19.48 Cassa Depositi e Prestiti SpA 31/07/2019 4.50 1,000,000,000 CNY 01/08/2022
BMW Finance NV 12/07/2019 Multi 3, 500,000,000 CNY Multi PPN
Citics 3 13.59
Malayan Banking Bhd 21/06/2019 Multi 2,000,000,000 CNY Multi
HSBC 4 4.77 Portugal 30/05/2019 4.09 2,000,000,000 CNY 03/06/2022
Stand Chartered 5 3.02 Trafigura Group Pte Ltd 20/05/2019 5.49 540,000,000 CNY 20/05/2022 PPN
ABC 6 2.77 Philippine 15/05/2019 5.00 2,500,000,000 CNY 20/05/2022
CCB 6 2.77 United Overseas Bank 07/03/2019 3.49 2, 000,000,000 CNY 14/03/2022
BMW Finance NV 04/03/2019 4.00 3, 000,000,000 CNY 08/03/2022 PPN
BNP Paribas 8 2.49 New Development Bank BRICS/The 19/02/2019 Multi 3, 000,000,000 CNY Multi
China Securities 9 1.96 Hungary Government International Bond 19/12/2018 4.30 2, 000,000,000 CNY 19/12/2021
CDB 10 1.91 Daimler AG 22/11/2018 Multi 4,000,000,000 CNY Multi PPN
Trafigura Group Pte Ltd 28/09/2018 6.20 700,000,000 CNY 28/09/2021 PPN
Daimler AG 15/08/2018 4.50 1,000,000,000 CNY 20/08/2021 PPN
League Table: Daimler AG 15/08/2018 3.70 3,000,000,000 CNY 20/08/2019 PPN
Panda Bond Issuance 2016-2018 Veolia Environment SA 09/08/2018 4.00 1,000,000,000 CNY 10/08/2019 PPN
Trafigura Group Pte Ltd 22/05/2018 6.50 500,000,000 CNY 24/05/2021 PPN
Bookrunner Rank %
Daimler AG 09/05/2018 Multi 5,000,000,000 CNY Multi PPN
Bank of China 1 42.94 Trafigura Group Pte Ltd 27/04/2018 6.50 500,000,000 CNY 27/04/2021 PPN
ICBC 2 35.93 Philippine Government International Bond 13/03/2018 5.00 1,460,000,000 CNY 23/03/2021
HSBC 3 8.59 Air Liquide Finance SA 05/03/2018 Multi 2,200,000,000 CNY Multi PPN
Emirate of Sharjah Government International Bonds 29/01/2018 5.80 2,000,000,000 CNY 02/02/2021
Standard Chartered 4 3.55
Mizuho Bank Ltd 12/01/2018 5.30 500,000,000 CNY 16/01/2021 PPN
China Int’l Capital 5 2.11 MUFG Bank Ltd 12/01/2018 5.30 1,000,000,000 CNY 16/01/2021
Haitong Securities 6 1.43 Daimler AG 10/01/2018 5.60 3,000,000,000 CNY 12/01/2021 PPN
China Development Bank 7 1.42 Province of British Columbia Canada 17/11/2017 4.80 1,000,000,000 CNY 23/11/2020
ABC 8 0.98 Daimler AG 15/11/2017 5.45 4,000,000,000 CNY 17/11/2020 PPN
United Co RUSAL PLC 04/09/2017 5.50 500,000,000 CNY 04/09/2020
China Merchants Securities 8 0.98 Daimler AG 22/08/2017 5.12 5,000,000,000 CNY 24/08/2020 PPN
CCB 10 0.71 Hungary Government International Bond 21/07/2017 4.85 1,000,000,000 CNY 27/07/2020
Malayan Banking Bhd 17/07/2017 4.60 1,000,000,000 CNY 24/07/2020
Daimler AG 16/05/2017 Multi 4,000,000,000 CNY Multi PPN
Bank of China executed 40 of 44
United Co RUSAL PLC 17/03/2017 5.50 1,000,000,000 CNY 20/03/2020
Panda bonds within the EMEA region, Daimler AG 14/03/2017 4.60 3,000,000,000 CNY 15/03/2018 PPN
and awarded the Best Panda Daimler AG 08/11/2016 Multi 4,000,000,000 CNY Multi PPN
bond house National Bank of Canada 28/10/2016 3.05 3,500,000,000 CNY 03/11/2019
in both 2018 and 2019. Veolia Environment SA 01/09/2016 3.50 1,000,000,000 CNY 02/09/2019 PPN
Republic of Poland Government International Bond 22/08/2016 3.40 3,000,000,000 CNY 26/08/2019
Source: Bloomberg, 07 Jan 2020 New Development Bank BRICS/The 13/07/2016 3.07 3,000,000,000 CNY 19/07/2021
Note: Panda Transaction from Foreign Issuers Daimler AG 15/06/2016 3.48 4,000,000,000 CNY 17/06/2017 PPN
4
BOC Executed Deals in Red Province of British Columbia Canada 14/01/2016 2.95 3,000,000,000 CNY 25/01/2019Bank of China Green Capabilities
BOC has been committed to promoting the development of Sustainable Finance
The Bank of China Limited (“BOC”), as a leader in China’s green finance development, was deeply involved in the GFSG
(the G20 Green Finance Study Group) meetings. We are also part of ICMA’s Green Bond Committee. From the meetings,
BOC has determined to build more experience in green finance and to contribute to the internationalization of the
domestic Green Bond market
BOC London participated the G20 Sustainable Finance Study Group (SFSG) technical meetings hosted in London in 2018.
During China’s G20 Presidency, the G20 Green Finance Study Group (“GFSG”) was established and was co-chaired by the
People’s Bank of China and the Bank of England. The GFSG was formed to explore ways to mobilise private sector funds
to finance green investments globally
Green Bond Issuance Asia 2019 (bln USD) China accounts 18% of global issuance BOC is a leading green bond underwriter (selected examples below)
Bookrunner Rank Vol ($m) Issues
HSBC 1 3.13 38 180 2016 2017 2018 2019
Bank of China 2 2.33 26 Geely Holding Group Three Gorges Group SSE PLC SSE PLC
160
CACIB 3 2.06 26 Joint Global Coordinator Joint Global Coordinator Joint Bookrunner Joint Bookrunner
140
Morgan Stanley 4 1.81 39 USD 400m EUR 650m EUR 650m EUR 650m
120
Sumitomo Mitsui Financial 5 1.69 39
ICBC 6 1.65 22 100 BOC is a leading green issuer in offshore green market
Amount issued in USD bn
ABC 7 1.59 21 80
CCB 8 1.54 17 60
2016 2017 2017 2018
Standard Chartered 9 1.53 25 BOC New York BOC London BOC Paris BOC London
40
Citi 10 1.49 21 BOC Luxembourg USD 1.5b
20 USD 3b Green Bonds USD 5m Green Bond USD 1b
5 Tranches in 3 Green Covered Bond 3 Tranches in 3 Green Bond
Source: Bloomberg, Climatebonds, 07 Jan 2020
0 currencies 1 Tranches in USD currencies 2 Tranches in USD
2015 2016 2017 2018
Other countries issuance (aligned with intern'l definitions) 2018 2018 2019 2019
BOC HK BOC Tokyo BOC Macau BOC Macau
China’s issuance (aligned with both Chinese and intern'l USD 380m USD 350m USD 2billion
definitions) HKD 3b Green Bond Green Bond/Sustainable RMB/Sustainable
Sustainability Bond 2 Tranches in 2 2 Tranches in 2 Green Bond 2 Tranches
China’s issuance (aligned with Chinese definitions only) 1 Tranches in HKD currencies currencies in 2 currencies
5Bank of China - Leading RMB House in 2019
Best Panda bond house Most impressive FIG issuer
Bank of China Bank of China
“For the second year in a row, Bank of China stood out among Panda “For the second year running, Bank of China is GlobalCapital
bond underwriters, making it the winner of the Best Panda Bond House China’s Best FIG Issuer of the year. It’s a much deserved victory, given
the state-owned bank continued to not only fulfil the Chinese
award for 2019.” government’s policy agenda through debt issuance, but also
introduced different novel structures to the market, both onshore and
Foreign issuers are also increasingly paying attention to the bank’s advantages in offshore.”
the Panda market. During our awards period, Bank of China was mandated on
several landmark Panda deals. Some of them opened a new funding channel for
foreign issuers while others introduced a new asset class to onshore investors. Most impressive corporate issuer
BMW
“Among the notable deals were the first Panda bond from Portugal, which opened Bank of China acted as Lead Bookrunner
up the market to eurozone issuers. Then there was the tightly priced and well- “BMW was not the only corporate issuer to tap the Chinese onshore
executed Panda by repeat issuer the Republic of the Philippines. In addition, a renminbi liquidity this year. Daimler, Trafigura and Veolia
senior preferred TLAC-eligible Panda by Crédit Agricole introduced a novel capital Environnement have all ventured into the Panda bond market. In the
instrument to the China market.” auto ABS market, manufacturer Dongfeng Nissan and US auto
company Ford have been frequent issuers. But no other corporation
“Bank of China was also not short of mandates from Daimler and BMW. The has had the same level of breadth and diversity as the German
Chinese bank was the lead underwriter on all five private placement Panda bonds automaker.”
sold by the two German automakers. Where there was a Panda deal to be done,
there was Bank of China.” Most impressive SSA issuer
Portugal
GlobalCapitalChina Awards 2019
Bank of China acted as Lead Bookrunner
“Many SSA issuers stood out during our awards period.
However, with this award, GlobalCapital Chinais recognising an SSA
issuer that set an example for others to follow. In this case, it was
Portugal….stood out as its Rmb2bn ($285m) Panda bond opened up
Eurozone countries to China’s bond market.”
6Bank of China – Leading China Capital Markets
China Bond House: Bank of China Renminbi bond: Portugal’s Rmb2bn Panda
Bank of China was the Lead Bookrunner
Growing reach
International appeal
“Bank of China added a growing focus on innovation to its already strong underwriting
“The Portuguese Republic made a commanding debut in the Chinese
capabilities in 2019, leveraging on its global network to inaugurate new products and new
market with a Rmb2bn (US$284m) three-year Panda bond, attracting
markets for Chinese issuers….
a strong order book as the first eurozone sovereign and only the third
European sovereign to sell bonds in China.”
BOC again topped the underwriting table for G3 bonds from China with US$11.7bn of
volume and a 6.4% market share during IFR’s review period.
“The debut issue gave Portugal a significant presence in the
Chinese capital market and could help pave the way for
Leveraging its relationships in a wide range of industries, BOC arranged offshore bonds for
corporate issuers in Portugal who might have demand for
Chinese local government financing vehicles, central state-owned enterprises, financial
financing in renminbi.”
institutions and property developers, which dominated a record year for Asian high yield.
BOC also played a key role in China’s a €4bn (US$4.4bn) triple-tranche sovereign deal in
IFR Asia Awards 2019
November, the nation’s first euro trade in 15 years, which drew robust demand and set a
sound benchmark for Chinese corporates.
Beyond China, other landmark deals included Asian Infrastructure Investment Bank’s
US$2.5bn debut, the Philippines’ US$1.5bn global bond, and Sri Lanka’s two global bond
offerings that raised a total US$4.4bn.”
IFR Asia Awards 2019
7International Awards Recognition
Global Awards Bond Awards
2019 – Global Capital China (Best Panda House) 2019- Global Capital China (Most impressive FIG/corporate/SSA issuer)
2019- Euromoney Rewards for Excellence - World's best bank in the emerging 2018 – Airline Economics (Asia-Pacific Debt Deal and Asia-Pacific Bank of the Year)
markets 2019: Bank of China 2018 – Finance Asia (Best Investment Grade Bond”, ”Best Belt and Road Bond”, “Best Hong Kong
Deal)
2019 – Climate Bonds (Largest Emerging Markets Green Bonds Underwriter) 2017 – Finance Asia (Best DCM House in Hong Kong)
2018 – GlobalRMB China Capital Markets (Best Panda House) 2016 – Finance Asia (China Best DCM House)
2018 – IFR Asia (China Bond House) 2016 – IFR Asia (China Bond House)
2018 – Caixin Media (Best China Onshore Bond House/Best China Panda Bond Underwriter/Best 2016 – IFR Asia (SRI Bond)
China G3 Currency Bond House) 2016 – The Asset (China Best Green Bond DCM Team)
2018 – The Asset (Best Bond Adviser-Global and Best Bond Adviser-Domestic) 2016 – The Asset (China Best G3 Currency Bond House)
2018 – Asiamoney (Best Corporate & Investment Bank” and “Best Overall Bank for Belt and Road 2016 – The Asset (Best Financial Institution Green Bond)
Initiatives) 2016 – Caixin Capital Market Achievement Award (China Best G3 Currency Bond House)
2017 – Finance Asia (Best DCM House in Hong Kong) 2015 – Asia Money (Best Bond Issuance)
2017 – The Asset (Best Bond Adviser – Global) 2015 – Finance Asia (China Best DCM Team)
2016 – IFR Asia (Asian Bank of the Year) 2015 – The Asset (Best DCM house in Hong Kong)
2015 – Finance Asia (Best Financial Institution) 2015 – Finance Asia (Best Offshore RMB Bond Deal)
2015 – Finance Asia (Best Bank Loan) 2014 – IFR Asia (China Best Bond Underwriter)
2014 – Fortune (Ranked 95th in the list of Fortune Global 500 enterprises) 2014 – The Asset (China Best Bond Underwriter)
2011 – 2014 – IMF (Systemically Important Financial Institution) 2014 – Finance Asia (Best Offshore RMB Bond Deal)
2013 – IFR Asia (Asia Pacific Best RMB Clearing Bank) 2013 – The Asset (China Best Bond Underwriter)
2013 – Euromoney (China Best Cash Management Bank)
2013 – Global Finance (China Best Foreign Exchange Provider, China Best Trade Finance Bank,
China Best Corporate Bank)
2013 – Trade Finance (Best Trade Finance Bank in China)
2013 – The Asset (Best Service Provider in Trade Finance of China)
8 2012 – The Banker (Bank of the Year in China)
2012 – Euromoney (China Best Bond Underwriter & Best Private Bank) 8
2012 – The Asian Banker (Best Trade Finance Bank in China)Outlook 2020
92020 Outlook – the Year of Choices and Geopolitical Risks
In 2019, global economic growth looks to have fallen to a post-financial crisis low
due to slowdowns in the US, Europe, and China. Although the labor market and
consumption remained relatively healthy, fixed investment and trade growth
weakened as the US-China trade conflict impacted business confidence.
With interest rates already close to, at, or below zero, the effectiveness of
traditional monetary policy is now diminished, leaving us to consider the role of
fiscal policy in stimulating growth.
While recent data suggest the euro zone’s downturn may be bottoming
out and tensions in the U.S.-China trade war may be easing,
economists aren’t counting on the ECB making major revisions to its China’s competition with the US in the economic, technological, and geopolitical
forecasts. They still see a recession as a near-term risk. spheres creates an ongoing challenge to the previous world order that will not be
easily resolved. In an era of “de-globalization,” the trade dispute between the two
nations could flare up again in 2020, even if the phase one deal is reached.
Elections will take place in the US and, Brexit negotiation will continue in 2020.
Geopolitics and regional conflicts will periodically disturb issuance windows.
However, as we have seen early January, the market sentiment remains very
strong and investors are willing to put their liquidity to work. We expect EM to
benefit, especially if USD might weaken.
10EUR issuance will have a continued boost by market technicals in 2020…We believe the
outlook for European fixed income markets will heavily depend on the trajectory of economic
growth and inflation.
• European Central Bank (ECB) kept its rates unchanged in December following • We expect the ECB will continue to do its utmost to support growth and inflation
new President Christine Lagarde’s first monetary policy meeting. in the euro zone. Additionally, the change at the helm of the ECB—from Mario
Draghi to Christine Lagarde—could result in the implementation of more
• The ECB Governing Council voted to keep the main deposit rate at the innovative measures and more pressure on national governments to stimulate
historic low of -0.5%, in line with market expectations, while the marginal their economies through fiscal measures.
lending facility remained at 0.25%.
• We believe sovereign bond yields should stay at historically low levels and
• The ECB’s statement reiterated that rates will stay at the current level or would expect yield curves to steepen if expectations begin to reflect the
lower until the central bank has seen the inflation outlook “robustly possibility of moderately rising inflation.
converge” to a level close to but below 0.2% and that underlying inflation has
remained consistently convergent with that level. • Credit spreads in near term are well supported by the mixed economic outlook,
resilient corporate balance sheets, and positive momentum in corporate
• The ECB led by Governor Lagarde is currently reviewing the policies and tools earnings.
available and this review expected to continue over 2020, therefore we do
not expect any substantial changes in the ECB near term decisions.
ECB
October
meetings Jan 23 March 12 April 30 June 4 July 16 Sep 10 Dec 10
29
2020
11The outlook for EM fixed income markets will heavily depend on Geopolitics, the US dollar
developments and Central Banks‘ accommodative policy stance.
US Treasury Actives Curve
• Central banks face an increasingly challenged policy outlook. Monetary policy 3.0
ammunition is running low as interest rates are near historic lows. We see further
rates cuts from Fed in 2020 but not very aggressive easing. 2.5
• The market expects the US dollar to weaken over the course of 2020. In recent years, 2.0
high interest rates, risk aversion stemming from the downturn in global trade, and
support from earnings repatriation have supported the USD. But over the coming
1.5
year(s) US growth and interest rates will be closer to those elsewhere in the world, and
uncertainty ahead of the US election and the waning effect of tariffs suggest a weaker
1.0
US currency is likely.
• As rates decreased about 90 bps in 2019, investors continued hunting for the yield and 0.5
we expect this trend to continue.
0.0
• If we see any inflationary pressure re-appearing, investor might switch to shorter 1M 2M 3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 15Y 20Y 25Y 30Y
duration assets.
I25 US TREASURY ACTIVES CURVE Last Mid YTM
I25 US TREASURY ACTIVES CURVE 6M Mid YTM
FED
meetings Jan 29 March 18 April 29 June 10 July 29 Sep 16 Nov 5 Dec 16
2020
Source: BOC, Bloomberg as of 07 Jan 2020
12Macro Stability is Key Priority for 2020 Global monetary policy may further ease in 2020, yet the room is constrained as Monetary policy should be stable in 1H20 as CPI growth rises to much higher interest rates are at historical lows. We do not expect the aggressive cuts in the near than the 3% target. But we see increasing possibility of RRR and LPR cuts in term from the PBOC, but gradual adjustment if required. H2 2020 as consumer inflation and property investment growth go down. • China has moderately eased monetary policy with RRR cuts in 2019 and targeted credit buyout for private business, while maintaining tightening stance for property and control over local government contingent debt. Actual results are mixed as loans to manufacturing and small business grew faster than loans to LGFVs, yet still slower than loans to property. • In December, The PBOC’s decision cut the required reserve ratio (RRR) for commercial banks by 50bp, which brought the ratio for large banks to 12.5% effective from Jan 6, has boosted market sentiment. The PBOC estimates that the cut will release RMB800bn into the financial system. But it is worth bearing in mind that the actual impact on the economy will probably be smaller than this figure implies. For one thing, the usual cash crunch around Chinese New Year (which falls relatively early this year on 25th January) will offset much of the liquidity released. Moreover, remember that China now has a hybrid monetary policy regime where short-term interest rates act as the key policy target. This constrains the amount of liquidity that can be kept outstanding in the financial system. • Rather than broad easing, the aim of the RRR cut appears to be to lower financing costs Source: Bloomberg 07 Jan 2020 for commercial banks in order to boost lending, particularly to SMEs. This is consistent with officials’ recent approach of providing only moderate policy support. As a result, we remain of the view that the current market expectations of rate cuts worth 50-100bp are too aggressive. In our view, policy rates will be cut relatively gradually over the weeks ahead. • The CPI inflation, which rose in November to above 4% for the first time since 2011, will be a constraint. But given that underlying price pressures remain low (core inflation fell to 1.4% last month, the lowest rate in years), we think officials will look through the headline rate and push interest rates gradually lower in coming months. • Global central banks have responded to the economic slowdown by easing monetary policies. China spearheaded the policy easing by cutting RRR and easing the liquidity condition, while Eurozone and Japan put a brake on QE exit or increased asset purchase. The US Fed has cut its policy rates three times this year while market still expects additional easing in 2020. 13
Business sentiment likely to improve with Sino-US phase one deal
Moderate Growth Going Forward
The recent message from the annual Central Economic Work Conference in
• Q319 GDP growth at 6% YoY, in line with our expectation. According to the National December 2019 was that to achieve the expected targets for 2020, China will
Bureau of Statistics (NBS), China’s GDP grew 6% YoY (all on year-on-year basis below unless make ensuring stability a top priority, and uphold the policy framework of stable
otherwise specified) in 3Q19, compared with 6.2% in 2Q19 and 6.4% in 1Q19. China has macro policies, flexible micro policies, and social policies that ensure basic needs
launched moderate policy easing with RRR cuts and tax reduction to boost the private are met.
business confidence. Although China and the US may reach a partial trade deal by the end
of this year, uncertainty still exists to restrain business investment.
China GDP YoY (%)
• China’s economy saw temporary stabilisation in November as most indicators beat 14
expectations. The industrial output notably bounced up with the manufacture PMI coming 12
back to the expansionary territory. The fixed asset investment (FAI) stabilised temporarily 10
with strong growth in property investment and further pickup in infrastructure investment.
The retail sales also mildly recovered as the auto sales narrowed the YoY declines. 8
6
• The phase one US- China deal indicates the two countries will cease fire at least in the 4
short term, which should boost market confidence and business sentiment. Some foreign
2
trade and supply chain activities may recover in the coming months. But the two sides still
hold some key issues unsolved. The recent progress may only moderately improve business 0
confidence and the lingering future uncertainties may still weigh on business investment
decisions. We expect the economy may see further mild slowdown with the GDP growth
down from 6.1% in 2019 to 5.8% in 2020.
• China will maintain proactive fiscal policy in 2020 as the downside pressure on growth USD/CNY Rate
calls for additional policy support yet rising consumer inflation restrains monetary policy 7.30
room. General fiscal deficit and local government special bond quota may increase from 7.20
2.8% and 2.2% of GDP in 2019 to 2.9% and 2.7% of GDP in 2020. We expect possible 7.10
additional small-scale tax cuts, but big-scale tax cut is unlikely as the government faces 7.00
increasing pressure from fiscal imbalance. 6.90
6.80
• Renminbi is likely to see mild appreciation against US dollar in 2020 as the US and China 6.70
may reach a partial deal. US$/RMB spot rate is expected to reach 6.85 at end-2020 6.60
compared to 7.05 at end-2019. 6.50
6.40
14 Source: 07 Jan 2019Loan Prime Rate Reform
Term Shibor (%) Interbank
The reform to the Loan Prime Rate (LPR)* announced in August 2019 is a further step in China’s transition towards an Repo( %)
interest rate targeting, market driven, monetary policy regime. Overnight 1.0030 1.00
China has a hybrid interest rate system where both market-based and regulated interest rates are used in the economy. In
1W 2.2190 1.85
the interbank market, short-term rates are largely liberalised and the People’s Bank of China (PBOC) adjusts liquidity via its
open market operations. But for long-term bank loans, interest rates are still set based on the 12-month benchmark lending
2W 2.0910 1.95
rate, which is set by the PBOC. One key drawback of this arrangement is that policymakers cannot influence interest rates
across the economy by adjusting short-term interest rates. Officials have talked about merging the “dual track” of interest
1M 2.7470 2.50
rates for some time as a result. The reform to the Loan Prime Rate announced this year marked a significant step toward this
goal.
3M 2.9200 2.60
The LPR was initially introduced in 2013 and has historically tracked the benchmark lending rate. But from 20th August, it
6M 2.9600 3.00
will instead be determined based on quotations from 18 commercial banks (up from 10 previously) that are submitted to
the central bank as a spread relative to the PBOC’s Medium-term Lending Facility (MLF) rate. A 5-year LPR rate was
9M 3.0050 3.50
introduced in addition to the current 1 year rate.
1Y 3.0500 3.50
It is also worth bearing in mind that the LPR rate will only affect new loans. All outstanding loans are still priced off of the
benchmark rate, which will continue to exist for the foreseeable future. In any case, the two lending rates probably will not
diverge dramatically in the near-term. Although the new LPR will likely be more sensitive to changes in market conditions, it
Term LPR (%)
will still be guided by officials. For now at least, policymakers will probably keep a close eye on the spread banks set above
1Y 4.15
the MLF rate to ensure that the LPR does not fluctuate wildly.
5Y 4.80
The Shanghai Interbank Offered Rate (or Shibor, http://www.shibor.org/shibor/web/html/index_e.html) is a
daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in
RRR 12.5%
the Shanghai wholesale (or "interbank") money market. Shibor is not used as the reference for corporate loans.
In addition, investors are tracking repo-rates with the volume-weighted average rate for the benchmark seven-day
repo in the interbank market, considered to be the best indicator of general liquidity in China Interbank Bond Market.
•The LPR quotation group is comprised of 18 commercial banks, which expands from the original 10 basis, increasing urban commercial banks, rural commercial banks,
foreign-invested banks and private banks, 2 for each respectively. The panel banks submit quotations to NIFC (National Interbank Funding Center (NIFC)), with 0.05% as
step length, before 9:00 am (GMT+8) on the 20th day of each month (holidays postpone). NIFC calculates the arithmetic average of the quotations, after removing the
highest and lowest quotes, and approximates to the integral multiple times of the 0.05% to conclude the final LPR. At 9:30 am (GMT+8), LPR is released to the public on
the websites of NIFC and PBOC.
Source: Bloomberg, SHIBOR 07 Jan 2020 15RMB Market Dynamics
AAA-rated 3-year Levels (%) AAA Corporate Secondary Performance and Monthly Changes
4.50 0
4.00 2
Yield Curves 1Y 3Y 5Y 7Y 10Y
3.50
4
3.00
2.50 6
AAA Curve (%) 3.12 3.36 3.70 3.93 4.21
2.00 8
1.50
10
1.00 1M Change (bps) (7) (11) (10) (6) (4)
0.50 12
0.00 14
1Y 3Y 5Y 7Y 10Y
Change 1M (RHS) Today 1M
We expect the central bank would maintain ample liquidity BOC China Onshore-Offshore Bond Yield Difference
supply to facilitate moderate credit growth in 2020. The 200
possibility of RRR and base rate cut is higher in 2H20 than 1H20 0
as consumer inflation gradually declines in the second half of -200
the year. -400
-600
-800
-1000
-1200
This Index tracks the yield differentials between offshore and onshore RMB bonds on a comprehensive, objective and synchronized basis. The index selects index-qualified 3-year (the
mainstream tenor of offshore RMB bonds) offshore and onshore RMB corporate bonds as constituents. The index and its sub-indices calculate the weighted average of YTM difference
between the onshore and offshore markets. A positive level indicates a higher yield condition onshore versus offshore. Greater the value, larger the yield differentials, and vice versa.
Source: Bloomberg, 07 Jan 2020
16RMB Market Dynamics
CDB 3-YR Yield Developments (%) CDB Bond Yield Curve
4.0 0
3.5 2
Yield Curves 1Y 3Y 5Y 7Y 10Y
3.0 4
6
2.5
8
2.0 CDB Bond (%) 2.57 2.96 3.36 3.54 3.57
10
1.5
12
1.0 14
1M Change (bps) (16) (8) (10) (7) 0
0.5 16
0.0 18
1Y 3Y 5Y 7Y 10Y
Change 1M (RHS bps) Today 1M
CNH USD CCS Developments (%) CNH/USD 3yr Cross Currency Swaps (CCS)
3.2 3.2
3.0 3.0
2.8 2.8
2.6 2.6
2.4 2.4
2.2 2.2
2.0 2.0
1M 3M 6M 1Y 3Y 5Y 7Y 10Y
Today 1M 3M
Source: Bloomberg, 07 Jan 2020
17China Marco Update
Change in CPI (% YOY) Change in PPI (% YOY) China Manufacturing PMI SA China Non-Manufacturing PMI SA
6.0 56
55
5.0
54
4.0 53
3.0 52
2.0 51
50
1.0
49
0.0 48
-1.0 47
-2.0 46
Figure 1: China change in CPI vs. PPI Figure 2: China Manufacturing and Non-manufacturing PMI
12.0
China Macroeconomic Developments
10.0
PMI remained in expansionary territory in December. The Non-Manufacturing
8.0
PMI recorded 50.2 in December, the same as November. It was the second
6.0 month that PMI bounced back to the expansionary territory.
4.0 The improvement was witnessed in both the production and demand side. The
2.0
production index increased from 52.6 in November to 53.2 in December. The
new order index reached 51.2 in December, compared to 51.3 in November.
0.0
The purchase price for materials rebounded in December, the PPI Index for
materials rebounded from 49 in November to 51.8, thanks to the rebalance of
supply and demand after the latest slowdown cycle. The industrials prices may
Total Retail Sles of Consumer Goods (% YOY) mildly rebound in 2020 as we expect the PPI to raise 0.6 in 2020 after dropping
Fixed Asset Invesntment (Excl. Rural Households % YOY) 0.4 in 2019.
Industrial Value Added ( % YOY)
Figure 3: Macro development indicators
18
Source: Bloomberg, 07 Jan 2020Execution Timing Consideration in H1 2020
JANUARY FEBRUARY MARCH APRIL May June
M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T W T F S S
1 2 3 4 5 1 2 1 1 2 3 4 5 1 2 3 1 2 3 4 5 6 7
6 7 8 9 10 11 12 3 4 5 6 7 8 9 2 3 4 5 6 7 8 6 7 8 9 10 11 12 4 5 6 7 8 9 10 8 9 10 11 12 13 14
13 14 15 16 17 18 19 10 11 12 13 14 15 16 9 10 11 12 13 14 15 13 14 15 16 17 18 19 11 12 13 14 15 16 17 15 16 17 18 19 20 21
20 21 22 23 24 25 26 17 18 19 20 21 22 23 16 17 18 19 20 21 22 20 21 22 23 24 25 26 18 19 20 21 22 23 24 22 23 24 25 26 27 28
27 28 29 30 31 24 25 26 27 28 29 23 24 25 26 27 28 29 27 28 29 30 25 26 27 28 29 30 31 29 30
30 31
Issuance Windows (post 2019 results)
UK/EU Holidays ECB expected to be busy ahead of the Easter and
May Holidays breaks
US Holidays Fed Rate Decision China holidays
USD: We expect busy mid January in USD ahead of Chinese New Year Holidays. The cut off date for an issuance based on Q3 2019 results (Reg S/144A) is
February 12 2020. We expected busy March and late April post the Easter break ahead of May 14 cut off date for the issuance based on 2019 results (Reg
S/144A).
EUR: We expect busy March as some issuers will come out from a black out period reporting 2019 results in February/early March as well as end of April
ahead of May holidays for borrowers reporting late March.
19Case Studies
20BOC’s Offshore Debt Distribution Network and Capabilities
BOC’s Offshore Debt Distribution Network and Capabilities
BOC’s Head Office set up its Global Markets business through its Hong Kong Branch. With Hong Kong, Singapore and London as its regional
centers, BOC’s Head Office directs and coordinates both onshore and offshore branches and subsidiaries
Europe Detail
Ireland UK Netherlands
Poland
Belgium Germany
Luxembourg
France Switzerland
Spain Italy
Russia
Canada
Monaco
South Korea
Turkey China
United States Japan
Bahrain
India
Mexico Thailand Taiwan
Cayman Islands Saudi Arabia UAE
Panama Malaysia
Colombia
Indonesia
Singapore
Brazil Zambia
Chile South Africa Australia
Uruguay
New Zealand
Argentina
Head Office Global Market Business Overseas Platform
(BOC Hong Kong Branch)
DCM Centre (Asia) DCM Centre (EMEA)
21Joint Lead Underwriter and Joint Lead Bookrunner - Ministry of Finance of the People’s
Republic of China - Multi Tenor EUR Transaction
Key Terms
Issuer The Ministry of Finance of the People’s Republic of China Coupon 0.125% / 0.50% / 1.00%
Size EUR 2b / EUR 1b / EUR 1bn Spread MS+30bp / MS+40bp / MS+58bp
Ranking Senior Unsecured Law/Listing English/LSE ISM and Euronext Paris
Format Reg S Clearing Clearstream
Ratings - Maturity 12 Nov 2026 / 12 May 2031 / 12 Nov 2039
Issue Date 05 Nov 2019 Tenor 7Y / 12Y / 20Y
China’s Successful Return to the Euro Market
• On 5 Nov 2019, The Ministry of Finance of the People’s Republic of China successfully launched their first Euro Sovereign bond since 2014. This EUR4bn
triple-tranche deal drew robust demand and set a benchmark for Chinese corporates in the euro market. This successful triple-tranche issuance
comprises of EUR2bn 0.125% bond in 7-year tenor priced at MS+30bps, EUR1bn 0.500% bond in 12-year tenor at MS+40bps and EUR1bn 1.00% bond in
20-year tenor at MS+58bps. The pricings were 15-22bps tighter than their initial guidance (MS+45-50bps for 7-year, MS+60-65bps for 12-year and
MS+75-80bps for 20-year). Bank of China acted as the Joint Lead Manager and Joint Bookrunner.
• The unrated transaction has attracted orders from a wide range of global investors such as dedicated emerging market investors, but also Continental
European pension funds and insurance companies as well as considerable orders from central banks, this highlighted investor confidence in Chinese
sovereign credit. The total subscription amount was around EUR20bn, about 5 times over-subscribed. Across the tranches, only c. 35% of total
allocation went to Asia, with 60% going to Europe and 5% to US offshore. This distribution confirms that the MoF China with this transaction has
managed to reach a new investor base in Europe and achieved a considerable investor diversification.
• The success of this transaction is likely to encourage further Chinese corporates to tap the Euro market and demonstrates the depth of investor
demand for high-quality Chinese and Asian credits.
22Joint Lead Underwriter and Joint Lead Bookrunner - Ministry of Finance of the People’s
Republic of China - Multi Tenor EUR Transaction
Key Terms
Issuer The Ministry of Finance of the People’s Republic of China Coupon 0.125% / 0.50% / 1.00%
Size EUR 2b / EUR 1b / EUR 1bn Spread MS+30bp / MS+40bp / MS+58bp
Ranking Senior Unsecured Law/Listing English/LSE ISM and Euronext Paris
Format Reg S Clearing Clearstream
Ratings - Maturity 12 Nov 2026 / 12 May 2031 / 12 Nov 2039
Issue Date 05 Nov 2019 Tenor 7Y / 12Y / 20Y
7Y 12Y 20Y
INVESTOR BY TYPE INVESTOR BY TYPE INVESTOR BY TYPE
9% 3% 13%
2% 4%
20%
31% 34% 39%
22%
39%
7%
26% 9% 42%
CB/Official Institutions CB/Official Institutions
CB/Official Institutions AM PF/Ins Banks/PB HF/Other AM AM
PF/Ins PF/Ins
INVESTOR BY REGION INVESTOR BY REGION INVESTOR BY REGION
8% 9% 13% 12% 2%
8% 19%
11% 25%
33%
34% 27%
37% 30%
27%
UK Germany UK Germany UK Germany
Other Europe Asia Other Europe Asia Other Europe Asia
US Offshore/other US Offshore/other US Offshore/other
23Joint Global Coordinator - Agricultural Development Bank of China Dual tranche transaction:
CNH 2.5 billion 3-year and CNH 3 billion 5-year Green Dim Sum Bond
Key Terms
Issuer ADBC Coupon 3.180% / 3.400%
Size CNH 2.5 billion / CNH 3 billion Interest base Fixed
Ranking Senior Unsecured Law English
Format Reg S Clearing Euroclear/Clearstream/CMU
Ratings A1/A+/A+ (Moody’s/S&P/Fitch) Maturity 06 Nov 2022 / 06 Nov 2024
Issue Date 30 Oct 2019 Tenor 3Y / 5Y
3 YEAR INVESTOR BY TYPE 5 YEAR INVESTOR BY TYPE • On 30 Oct 2019, Agricultural Development Bank of China, the only agricultural
policy bank in China, issued another green bond in accordance with their ‘ADBC
6% 1%
2% Green and Sustainability Bond Framework’. The dual tranche green bonds is
17%
17% proposed to list across Hong Kong Stock Exchange, Luxembourg Stock Exchange
and China Europe International Exchange, London Stock Exchange and MOX.
81% 76%
• The proceeds for the 3-year bond is for financing and/or refinancing of the eligible
green assets as described under the Bank’s Green and Sustainability Bond
Framework, while the 3-year is for finding the general credit business, working
Banks/FI CM/Ins/SSA FM/AM/PB Bank/FI FM/AM CB PB/Other
capital and GCP.
3 YEAR INVESTOR BY REGION 5 YEAR INVESTOR BY REGION
• The bond attracted lots of high-quality investors, including central banks,
sovereign funds, banks, Investment banks, funds and asset management
12% 13%
companies. It was almost 3 times oversubscribed (final book was over CNH 13
billion) with 3-year from 36 accounts and 5-year from 40 accounts.
88% 87%
EMEA Asia EMEA Asia
24Joint Lead Manager & Joint Bookrunner - SPDB London Branch
USD 300 million Inaugural Green Bond 3-year
• On 24 October 2019, Shanghai Pudong Development Bank London Branch issued an inaugural USD ALLOCATION BY BOOKRUNNERS
300 million green bond.
11%
• The proceeds is to finance and/or refinance loans to assets or projects that contribute to energy
conservation and emission reduction, while building resilience to climate change.
89%
• The bond attracted lots of high-quality investors. The final book size was over USD 2.6bn (more than
8x oversubscribed) across 43 accounts. Bank of China Other 15 JBRs
.
INVESTOR BY TYPE
12% 1%
87%
Key Terms
Bank AM/FM/Ins
Issuer SPDB London Coupon FRN Corp/PB/Other
Size USD 300 million Spread 3mL+70 bps
Ranking Senior Unsecured Law English
INVESTOR BY REGION
Format Reg S Clearing Euroclear/Clearstream
Ratings Baa2/BBB/BBB (Moody’s/S&P/Fitch) Maturity 20 Oct 2022 11%
Issue Date 24 Oct 2019 Tenor 3Y
89%
Asia EMEA
25Active Bookrunner: Logicor GBP Senior Secured Deal
Distribution
On 10 Oct 2019, Bank of China arranged for Logicor, one
of the largest European warehouse and logistics
1% Asset/Fund Managers
company, to issue its first senior secured Sterling bond.
1% UK
35% This is the second largest Sterling deal of the year among
7%
Insurance/Pension Funds
corporate issuers.
63%
Hedge Fund/PB Rest of The initial price thoughts were UKT+175bps for the 7-
Europe
year deal, post three days of roadshow in London and
93%
SWF
Edinburgh. The transaction attracted GBP 1.8bn book
before its final pricing guidance. The scale of interest
Key Terms allowed company to tighten 15 bps and landed at UKT +
160bps with final book size of 1.6bn. Bank of China sales
Issuer Logicor 2019-1 UK Plc Coupon 1.875%
covered around 70% of the total book.
Issuer Rating -/BBB/- Final UKT+ 160 bps
Spread
Compared with Logicor’s existing EUR bond with the
Rating Aa2/AA-/AA Format Senior Secured, Reg S
same tenor, the deal was 80 bps cheaper. This is due to
the senior secured structure, and positive technicals in
Tenor 7 year Law English
the Sterling bond market amid lack of corporate supply.
Issue Size GBP 900million Listing Irish GEM Listing
Issue Date 10 Oct 2019 Reoffer 1.924%(s/a)
yield
26Joint Global Coordinator – Three Gorges Group Dual Tranche Transaction
USD 850mln 5-year and 30-year
Key Terms
Issuer Three Gorges Finance I (Cayman Islands) Limited Coupon 2.300% / 3.200%
Guarantor China Three Gorges Corporation Spread T+95bps / T+112.4bps
Size USD 500mln / USD 350mln Law New York
Format Senior Unsecured / Reg S Listing SGX
Ratings A1/A/A+(Moody/S&P/Fitch) Maturity 16 Oct 2024 / 16 Oct 2049
Issue Date 09 Oct 2019 Tenor 5Y / 30Y
5 YEAR INVESTOR BY TYPE 30 YEAR INVESTOR BY TYPE • On 9 October 2019, China Three Gorges Group (CTG), the state-owned
hydropower company in China, successfully raised USD 850 million through a
5% 9% 7% dual transaction.
24%
• This successful transaction represented the fourth transaction for Bank of
71% China with CTG, after participating in their first EUR 650 million offshore Green
84% Bond in 2017 (which was also the first green EUR bond transaction from a
Chinese Non-Financial enterprise), USD 700/EUR 700 million IN 2016 and USD
1.5 billion bonds issued in 2015.
Banks AM/FM Broker Dealer/Others Bank AM/FM Brokers / Dealers
• Both transactions attracted many high-quality investors. The final orderbook
5 YEAR INVESTOR BY REGION 30 YEAR INVESTOR BY REGION
for the 5-year note reached USD 950m from 44 accounts, and USD 500m from
39 accounts the 30-year note.
7%
20%
93% 80%
EMEA Asia EMEA APAC
27Joint Global Coordinator – CNOOC 10Y/30Y USD1.5 billion Dual Tranche 2019
Key Terms
Bank of China successfully managed the
transaction for CNOOC, one of the largest Issuer CNOOC Finance Limited Coupon 2.875%/ 3.300%
Oil companies in China, as the Joint Global Guarantor CNOOC Limited Reoffer Yield 2.941%/ 3.300%
Coordinator and Lead Bookrunner.
Size (m) USD1,000/ USD500 Pricing Date 09/27/2019
Format SEC Registered Law New York
Total book size for the 10-year tranche
had approx. 2.3x over-subscription, and Ratings A1 (Moody’s)/ A+ (S&P) Tenor 10Y/ 30Y
the 30-year tranche had approx. 3x over- Exchange HKEx Listing Reoffer Yield T+120bps/112bps
subscription.
10Y USD1,000mm 30Y USD500mn
INVESTOR BY REGION INVESTOR BY REGION
7% 13%
Asia Asia
32%
US US
61% 32% 55%
Other Other
INVESTOR BY TYPE INVESTOR BY TYPE
2%
7% AM AM
35% 30%
Banks Banks
1%
56% 68%
PF anf 1% PF anf
SWFs SWFs
28Joint Global Coordinator – Chinalco Capital Holdings Limited
USD 750 mlillion PerNC5 Hybrid
• On 04 September, Chinalco Capital Holding Limited, Guaranteed by Aluminium Corporation of China, INVESTOR BY TYPE
launched Perpetual NC5 USD 750 million bond. Bank of China acted as the Joint Global Coordinator
and Joint Bookrunner. 2%
• Aluminium Corporation of China is a leading company in China’s non-ferrous industry, with a strong 14%
portfolio of assets among global competitors. It is also the only large company in China’s aluminium
industry that’s engaged in the whole value chain. Bank of China has been the active bookrunner for 52%
all three USD bonds issued under Chinalco Capital Holding Limited. 32%
• Proceeds used for refinancing the group’s offshore existing indebtedness and for the development of
offshore business.
Fund/AM Corp/Ins Banks PB/Securities
• The transaction was well received by investors and the final book reached USD 6 billion with orders
from 185 accounts.
Key Terms INVESTOR BY REGION
Issuer Chinalco Capital Holdings Limited Coupon 4.100%
Guarantor Aluminium Corporation of China Reoffer T + 278 bps
Size USD 750 million Law/Listing English/HK 6%
Ranking Senior Unsecured Clearing Euroclear/Clearstream
Format Reg S Step-ups CoC call at 101%
Ratings BBB+ Maturity PerNC5 94%
Issue Date 04 Sep 2019 Tenor Perpetual
ASIA EMEA
29Joint Global Coordinator – Shanghai International Port
USD 800 million Dual Tranches 5-year and 10-year
Key Terms
Issuer Shanghai Port Group BVI Dev Co Coupon 2.400% / 2.850%
Guarantor Shanghai International Port Group Reoffer T+108 bps / T+140 bps
Size USD 300m / USD 500m Law/Listing English/HK
Ranking Senior Unsecured Reg S Clearing Euroclear/Clearstream
Ratings A1 Maturity 11/09/2024 // 11/09/2029
Issue Date 04 Sep 2019 Tenor 5Y / 10Y
5Y – INVESOR BY TYPE 10Y – INVESTOR BY TYPE • On 04 September, Shanghai International Port launched its dual tranche
offering of 5Y USD 300 million bond along with a 10Y USD 500 million bond.
2% Bank of China acted as the Joint Global Coordinator and Joint Bookrunner.
21%
20%
46%
12% • Proceeds used for refinancing the group’s offshore existing indebtedness and
66% 1%
for other general corporate purposes.
32%
• The transaction was well received by investors and the final book for 5-year
tranche reached USD 2.7 billion with orders from 81 accounts, including USD
AM/FM Ins/SWF PB Banks AM/FM Banks Ins/SWF PB
630 million JLM interest, and the 10-year tranche reached USD 2.4 billion with
5Y – INVESTOR BY REGION 10Y – INVESTOR BY REGION orders from 116 accounts, including USD 200 million JLM interest
4% 4%
96% 96%
EMEA Asia Asia EMEA
30Active Bookrunner - Logicor 2-Tranche Transaction
EUR 1.85 billion 5-year and 8-year
Key Terms
Issuer Logicor Financing SARL Coupon 0.75%/1.625%
Size EUR 850mln / EUR 1billion Spread MS+110bps / MS+170 bps
Ranking Senior Unsecured Law English
Format Reg S Listing Irish GEM Listing
Ratings -/BBB/- Maturity 15 Jul 2024 / 15 Jul 2027
Pricing Date 15 Jul 2019 Tenor 5Y/8Y
5Y – INVESOR BY TYPE 8Y – INVESTOR BY TYPE • On 8 July 2019, Logicor, the largest owner of logistics real estate in Europe, made
3% the second drawdown of EUR 1.85 billion under its EMTN programme this year,
10% 14%2% consisting of an EUR 850m 5-year and EUR 1bn 8-year fixed rate offerings. Logicor
4% 4%
took EUR 900m out of the market in two tranches on April 25 2019 (2 year and tap
6%
of 2028) targeting predominately short-end investor base.
83% 75%
• The initial price thoughts were MS+130-135bps and MS+190-195 bps for 5-year
and 8-year, respectively. The transaction attracted EUR 3.9bn book at the launch,
which was skewed towards the longer end. The scale of interest allowed company
AM Banks/PBs HF Ins/Pf AM Banks/PBs HF Ins/PF Others
to tighten 22.5 bps for both tranches, and also Logicor upsized its size target. Bank
of China sales covered around 70% of the total order book.
5Y – INVESTOR BY REGION 8Y – INVESTOR BY REGION
3% 4% • Favourable market encouraged the issuer to bring forward the funding plan from
22% H2 2019 and conclude their EUR funding target for 2019.
29%
44% 3% 2%
2% 11%
54% 3%
12%
7% 5%
Benelux France Germany/Austria BeNelux France Germany/Austria
Iberia/Italy Switzerland UK Iberia/Italy Switzerland UK
Other Other
31Joint Lead Manager - Marks and Spencer Plc
GBP 250 million 8-year
• On 3 July 2019, Bank of China successfully arranged for Marks & Spencer a GBP250mln 8-year deal. The initial INVESTOR BY TYPE
price guidance was Mid Gilts+300-310bps, before GBP 2 billion of demand allowed them to tighten that spread
by 35bps. 4%
6% 4%
• The orderbook fell to GBP1.65 billion following the revision, and landed at Mid Gilts+270bps. The deal was 8%
well-received by investors on the back of strong demand for yield, despite a Brexit-fuelled drop in consumer
confidence.
• The deal includes a 125 basis-point step-up if the company loses investment-grade status. 67%
• The bond was 71% distributed to investors based in the UK &Ireland, and Fund Managers contributed to 78%
Fund Managers Insurance/Pension Fund
of allocation. Official Institution Banks
Others
Key Terms INVESTOR BY REGION
Issuer Marks and Spencer Plc Coupon 3.25% 8%
4%
Size GBP 250 million Spread Mid Gilts+270 bps
Ranking Senior Unsecured Law English
17%
Format Reg S Clearing Euroclear, Clearstream
Ratings Baa3(Stable)/ BBB-(Neg) (Moody’s/S&P) Maturity 10 Jul 2027
Pricing Date 03 Jul 2019 Tenor 8Y 71%
UK &Ireland Germany & Swizerland France Other
32Joint Lead Underwriter and Joint Lead Bookrunner - Asian Infrastructure Investment Bank
USD 2.5 billion 5-year Inaugural bond
• On 9 May 2019, Bank of China successfully arranged a 5-year USD 2.5 billion inaugural transaction for Asian INVESTOR BY TYPE
Infrastructure Investment Bank (AIIB). The final pricing of MS+6bp has positioned AIIB among the very top
5% 2%
supranational names and the spread to US Treasuries is also the tightest for a 5 year issue this year for a supra-
national.
25%
• AIIB is a multilateral development bank with a mission to improve social and economic outcomes in Asia with
97 approved members worldwide. All three major rating agencies assigned AAA ratings to AIIB. The transaction
is registered with the SEC and listed on the London Stock Exchange.
67%
• The highly anticipated debut bond issue attracted over USD 4.4 billion orders from over 90 investors across 27
countries, reflecting the attention and recognition of global institutional investors to AIIB. The distribution is in
line with premium supranational peers with very high quality SSA investors including central banks and CB/OI Bank Fund Manager Insurance/ Pension
international organisations strongly represented.
• It is particularly notable that the deal benefited from early Indications of Interest and anchor orders out of Asia
that helped drive the momentum and subsequent pricing of this inaugural landmark global transaction. Asian
investors contributed over half of the total order book. Bank of China was the only Chinese active bookrunner.
Key Terms INVESTOR BY REGION
Issuer Asian Infrastructure Investment Bank Coupon 2.25%
16%
Size USD 2.5 billion Spread MS+6 bps
Ranking Senior Unsecured Law New York
Format SEC Registered Clearing DTC, Euroclear, Clearstream
49%
Ratings Aaa/AAA/AAA (Moody’s/S&P/Fitch) Maturity 16 May 2024
35%
Pricing Date 09 May 2019 Tenor 5Y
Asia Europe America
33Joint Lead Manager and Joint Bookrunner - Logicor 2-tranche transaction
EUR 900 million 2-year and 9-year, tap on existing 28’
Key Terms
Issuer Logicor Financing SARL Coupon 0.500% / 3.250%
Size EUR 600mln / EUR 300mln Spread MS+70bps / MS+220 bps
Ranking Senior Secured Law/Listing English / Irish GEM Listing
Format Reg S Clearing Euroclear / Clearstream
Ratings -/BBB/- Maturity 30 Apr 2021 // 13 Nov 2028
Issue Date 25 Apr 2019 Tenor 2Y/9Y tap on existing 28’
2Y – INVESOR BY TYPE 9Y – INVESTOR BY TYPE • On 25 Apr 2019, Logicor, the largest provider of logistics real estate in Europe,
made a second drawdown of EUR 900m from its EMTN programme, consisting of
5% 7% a 600m two-year fixed-rate offering, and a 300m tap of its 3.25% November
14%
1% 2028s. Logicor made its bond market debut in November 2018 with a EUR 1.8bn
6% 29%
55% three-tranche transaction.
74%
3% • The initial price thoughts were MS+100bps and MS+230/235bps area for 2-year
5%
and tap tranche respectively . The short-dated bond was strongly bid and investors
placed over EUR 3.35bn order, allowing issuer to cut spread from 100bps to 70bps
AM Banks/PB HF Ins/PF Others AM Banks/PB HF Ins/PF Others
over swaps. Books for the tap closed at over EUR 850m and spread tightened 12.5
bps to 220bps over swaps.
2Y – INVESTOR BY REGION 9Y – INVESTOR BY REGION
7% 4% 4% 12% • The barbell approach approved successful and helped the company lock in an
23% attractive average spread.
36% 19%
39%
2%
19%
5% 2% 26%
2%
Benelux France Germany/Austria Benelux France Germany/Austria
Iberia/Italy Switzerland UK Iberia/Italy Switzerland UK
Other Other
34Joint Lead Manager & Joint Bookrunner - ICBC Singapore Branch
USD 1.8 billion Multi-Currency Green Bond
• On 16th April 2019, as the Joint Bookrunner, Bank of China successfully assisted ICBC Singapore Branch in issuing the first multi-currency “One Belt, One
Road” interbank normalization mechanism green bond, including a 3-year 900 million USD floating bond, 5-year 600 million USD floating bond and 3-year
500 million EUR fixed bond. The final issuance price of the 3-year 900 million USD floating bond is 3mL+72bps, which is 23 basis points tighter than the
IPG; 3mL+83bps and 22 bps tighter for 600 million USD floating bond; MS+48 bps and 22 bps tighter for the 3-year 500 million EUR fixed bond.
• As the largest Chinese financial institution green bond since this year, the proceeds are mainly used for qualified green asset financing/refinancing in the
“Belt and Road” countries and regions. The issuance aims to promote the “One Belt, One Road” inter-bank normalization cooperation mechanism.
• The offering has been sought after by more than 200 investor accounts in sovereign, super-sovereign institutions, banks, asset management companies,
funds and private banks in Europe, the Middle East and Asia Pacific. The 3-year USD is over subscript by more than 2.6 times, 2.5 times for 5-year USD
and 3.6 times for 3-year EUR.
• As a joint bookrunner, BOC has invested and brought sole orders of 220 million USD and 10 million EUR, effectively driving the order book and helping
customers successfully complete this issuance.
Key Terms
Issuer ICBC Singapore Branch Coupon FRN/FRN/0.25%
Size USD 900m / USD 600m / EUR 500m Spread 3mL+72bps/3mL+83bps/MS+48bps
Ranking Senior Unsecured Law/Listing English/Singapore Stock Exchange
Format Reg S Clearing Euroclear/Clearstream
Ratings A1/A- Maturity 25 Apr 2022/ 25 Apr 2024/ 25 Apr 2022
Issue Date 25 April 2019 Tenor 3Y/5Y/3Y
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