Stiff competition for best advisers and banks

Many players made a strong case as Best Issuer, some advisers set benchmarks for their clients, and what does it take to win the Best Bank and Best ESG Bank awards? Please join our poll below

The year just passed tested the mettle of banks and in particular their ability to guide clients through turbulent market conditions. With rising interest rates and heightened US-China trade tensions, 2018 could be classed as a defining year for a number of global and regional banks, a year that amply demonstrated the strength of their franchise in executing transactions in tough markets.

In doing so, they enabled their clients, the issuers and borrowers, to meet their funding requirements by accessing the available pool of liquidity, whether in public and private placement markets, or through the equity or debt capital markets (DCM).

The difficult market environment provided the challenging backdrop for those issuers and borrowers that stood out in 2018. The Republic of the Philippines (RoP) was chosen as the Sovereign Issuer of the Year for executing landmark transactions in different offshore bond markets in 2018, starting with the US$2 billion offering in January to help fund the country's huge infrastructure programme. The new bonds were launched concurrently with its trademark liability management exercise – a one-day accelerated switch tender offer for 14 of the RoP's outstanding US dollar-denominated bonds maturing between 2019 and 2037.

Then in March, the sovereign priced the first sovereign Panda bond from the Asean region amounting to 1.46 billion renminbi (US$216 million), which further diversifies its investor base. And in August, the sovereign returned to the public Samurai bond market after an absence of eight years, printing a multi-tranche offering totalling 154.2 billion yen (US$1.42 billion). The biggest ever Samurai bond issuance from Asia, outside of Australia, the transaction marked the first time in almost 20 years that the RoP had issued Samurai bonds on a standalone basis.

The corporate sector produced three outstanding issuers across different regions. In Southeast Asia, Vingroup of Vietnam was at the forefront of foreign investors' radar in 2018, as the group was involved in several significant transactions. The Vingroup represents the largest real estate and tourism, hospitality development and management company which is listed in Vietnam, outside of state-owned enterprises, in terms of market capitalization.

Its standout deals include the US$2.203 billion equity offering for its subsidiary Vinhomes Joint Stock Company in May that comprised a US$1.35 billion IPO and an US$853 pre-IPO placement by GIC of Singapore. It was the largest Asian frontier markets equity offering that was successfully priced despite a challenging market backdrop.

In August, Vingroup also attracted a US$400 million strategic investment from Hanwha Group of Korea through the issuance of convertible dividend preference shares by way of private placement. It was Hanwha's largest direct strategic investment in a Vietnamese company.

Two other subsidiaries of Vingroup also participated in fund raising forays, with Vinfast Trade and Production Limited signing in July a US$400 million secured term loan facility, and Vinpearl Joint Stock Company raising in June US$325 million through an exchangeable bond.

Another outstanding corporate issuer from North Asia is Chinese property developer Agile Group Holdings, which completed a series of landmark DCM deals. In August, it closed a US$1.55 billion syndicated facility, which was upsized due to strong demand.

Earlier in February, the company printed its inaugural senior ranking perpetual instrument structured solely to achieve accounting equity credit. The US$300 million perpetual non-call five-year bond marked the return of Agile to the hybrid market since its previous subordinated perpetual securities in 2013.

The company came back to the market in July with a US$200 million three-year non-call two-year bond, after which it printed another US$400 million from a tap about a week later. Agile capped its 2018 US dollar bond market foray with another US$400 million trade for two years in November.

One of India's prolific issuers and borrowers, Reliance Industries, was the corporate issuer from South Asia, having recorded its largest long-term debt raising - amid significant volatility in the financing markets - with a total amount of US$9.40 billion equivalent. Comprising of US$6.25 billion equivalent foreign currency debt and about US$3.15 billion in Indian rupee, this enterprise accessed different funding sources such as syndicated and club/bilateral loans, export credit agency (ECA)-backed financing, as well as bonds and debentures.

Its largest debt transaction in 2018 was the US$2.653 billion term loan facilities closed in November, representing the group's largest ever syndicated loan and the most widely syndicated loan deal by Reliance.

In August, Reliance was the first company globally to use the Italian ECA SACE push strategy programme worth about US$500 million equivalent. This refers to "untied" support based on future engagement with Italian vendors.

Among the financial institutions, Bank of China (BoC) made a strong case as the Best Issuer, and started its deal-making with the US$3.2 billion equivalent multi-currency bonds in April, labelled as One Belt One Road offering. The bank simultaneously tapped four different currencies – New Zealand dollar, US dollar, Australian dollar and euro – in six different floating and fixed rate tranches, with tenors from three years to five years in the global debt market.

In May, BoC launched a triple-tranche transaction comprising of HK$3 billion (US$384.60 million) sustainability bonds through the Hong Kong branch and a dual-tranche green bonds totalling US$1 billion through its London branch. BoC (Hong Kong) was the first Chinese issuer to launch a sustainability bond in the international capital markets, setting a benchmark for other potential issuers.

Then in August, BoC (Hong Kong) issued its inaugural US dollar Basel III-compliant instrument, which also represented this bank's return to the US dollar bond market in nearly seven years.

The race to be the Best Bank in Asia, outside of Japan and Australia, is a three-way competition between perennial winner Citi, plus DBS and HSBC. The US bank had a strong start in Asia in 2018 and the region now accounts for 26% of its global profit, with the Asia region increasing its contribution to Citi's global transformation, representing the largest region outside of North America. It added close to US$1 billion in revenues to nine months last year.

Citi exhibited balanced growth across countries and products and in terms of the institutional clients group, the Asia-to-Asia revenues were up 20% year-on-year. It is also expanding its Asia desks' focus on Belt and Road initiative to go deeper and wider with key clients.

DBS continues to carry the torch for regional banks in Asia, delivering another healthy performance in the first nine months of 2018. Net profit surged 36% to S$4.31 billion (US$3.19 billion), while total income rose 12% to S$9.94 billion, underpinned by a 16% increase in net interest income and 8% growth in fee income. Return on equity improved from 9.4% to 12.4% due to a higher net interest margin, a normalization of allowances and a more efficient capital base.

By business unit, income from consumer banking/wealth management rose 21% to S$4.20 billion from increases in all product categories led by deposits, investment products and cards. Institutional banking income went up 8% to S$4.26 billion as earnings from cash management and treasury customer flows increased.

HSBC is also making a strong pitch for the Best Bank award category, anchored by its large presence in Hong Kong, where it is considered the largest bank by assets with a full spectrum of products and services. Like Citi and DBS, HSBC is enhancing its innovative digital banking, rolling out a range of simpler and faster solutions to elevate its clients' commercial banking experience.

As a leading global fund management institution, 37% of its US$468 billion assets under management are distributed in Asia as of end June 2018 for a year-on-year increase of 17%. HSBC is also a leader in renminbi investments and is one of the first to launch RMB hedged share class for UCITS fund for Hong Kong investors in 2018.

One category for the awards that is catching on among the banks in the region is the Best ESG Bank, as an acknowledgement of their greater emphasis on sustainable financing and delivering climate-focused and responsible investing initiatives. Many banks are shifting their business activity to support the global transition towards a low carbon economy through funneling more funds to renewable energy and energy-efficient projects, and sacrificing business opportunities by moving away from coal-related projects, which still account for a large percentage of the energy mix in Asia.

Our winner in 2017, Bank of America Merrill Lynch, now faces stiffer competition – from ANZ, Credit Agricole, DBS, HSBC and Societe Generale – with the demonstration of their expertise and leadership in structuring green, social and sustainability bonds across a range of issuers.

As a result, Asia saw the issuance of the first green/water bond by Korea Water Resources Corporation, the first social covered bond by Korea Housing Finance Corporation and the first sustainability project bond by Tropical Landscape Finance Facility, spawning similar transactions during the year.

Other closely-contested awards include Best Green Adviser, Best Corporate and Institutional Adviser, Best Equity Adviser and Best M&A Adviser. Together with the other award categories under capital markets and structured finance, The Asset will preview the nominees in the different categories before we announce the winners Oscar-style at the awards gala dinner on February 20 2019 in Hong Kong.

We also invite our readers to participate in the poll to pick who they consider are most deserving the win the different award categories.

The board of editors at The Asset also selected outright winners for Best Houses and Advisers and these include PAG as the Best Private Equity House. PAG is one of Asia's largest alternative investment management firms, managing a diverse array of funds in private equity, real estate and absolute return strategies.

In 2018, together with Ningbo Joyson Electronic Corporation and Future Industry Investment Fund, PAG provided equity and shareholder loans to support the acquisition of assets of Takata Corporation by Joyson consortium. PAG also helped put Yingde Gases Group Company, the largest China-based independent industrial gas supplier, back on track and in recovery mode following the shareholders' dispute and loan covenants breach that severely impacted the company's credit rating.

In the sub-advisory categories, Credit Suisse was voted as best adviser in the consumer/retail, commodities, insurance/NBFI, real estate and TMT sectors. Bank of America Merrill Lynch was chosen as the Best Adviser in Power/utilities and FIG sectors, while Citi and HSBC won the Best Adviser honours in Pharma/healthcare and Transport sectors, respectively.

The Best law firm award was given to Allen & Overy for the breadth and depth of its practice in Asia, advising on several landmark and innovative capital markets’ transactions. It boasts of a strong track record of complex cross-border deals and represented clients in arranging bespoke financing solutions – with strong focus on leverage finance, acquisition finance, private equity-driven finance, property/real estate finance, share-backed finance and general corporate financings 

 

 

To view the Best Issuers please click here.

To see the full list of nominees and winners please click here.

To participate in our poll please click here.

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