Two big Aussie deals boost otherwise tepid APAC (ex-Japan) HY USD primary bond market in April

Data InsightDebtDynamics 5 May

Two big Aussie deals boost otherwise tepid APAC (ex-Japan) HY USD primary bond market in April

Two big deals out of Australia boosted the otherwise lackluster APAC (ex-Japan) high-yield USD-bond primary market last month, helping it record the highest monthly volume tally since September last year.

 Total issuance in April was USD 3.96bn across six deals, up 160.5% MoM from USD 1.52bn priced via eight deals in March, and just a tad above the USD 3.94bn recorded from 18 deals in April 2021.

Last month, Australian iron-ore miner Fortescue Metals Group printed USD 1.5bn from a dual-tranche deal: USD 700m 5.875% eight-year notes and USD 800m 6.125% 10-year green notes. Perth-based iron-ore and lithium mining and mining-services company Mineral Resources issued USD 1.25bn two-tranche bonds consisting of USD 625m 8% 5.5NC2.5 notes and USD 625m 8.5% 8NC3 notes. These transactions propelled the country’s HY-bond-issuance volume to a new first-four-month high of USD 3.1bn.

Chinese local-government financing vehicles (LGFV) accounted for the remaining USD 1.21bn bonds printed in APAC (ex-Japan) in April this year.

 There were no new issuances from Indian and Indonesian companies during the month, dragging down the two country’s 4M22 volumes to their lowest levels since 2016. India volumes were down 68.3% YoY in 4M22 to USD 2.025bn, while Indonesia fell 92.8% to just USD 90m.

Some prospective Indian issuers were looking to tap the market in April, including renewable-energy company Continuum Green Energy which was marketing an up to USD 400m 3.5-year bond and Warburg Pincus-backed jewelry-showroom chain Kalyan Jewellers that was marketing an up to USD 200m notes. Both companies have not yet emerged with price guidance.

There is a possible increased risk aversion towards Indonesian credits after Debtwire published a two-part case study on 19 April on textile company Sri Rejeki Isman’s (Sritex) controversial restructuring. Gold and copper miner Freeport Indonesia, rated Baa3 by Moody's and BBB- by Fitch, was the only Indonesian company to have printed USD bonds in April, raising a combined USD 3bn across five-, 10- and 30-year tranches.

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