MOST IMPRESSIVE FIG ISSUER
China Construction Bank
One of the four biggest Chinese state-owned commercial banks, China Construction Bank (CCB) is a regular issuer in both the onshore and offshore debt capital markets.
It was the first financial institution from China to sell a green dollar bond in 2020 and reopened the offshore tier two market for its peers after the global outbreak of the Covid-19 pandemic. In March, CCB issued a Rmb1bn offshore renminbi note through its six-month-old Astana arm, strengthening the ties between China and Kazakhstan under the Belt and Road Initiative.
But what really made CCB stand out — and made it our choice for most impressive FIG issuer — was its second-to-none presence in China’s securitization market.
As an originator, CCB kick-started the residential mortgage-backed securities (RMBS) sector in 2005 with the first such deal. Fifteen years later, the onshore RMBS market has seen Rmb1.78tr of issuance. CCB has grown alongside the market. The largest RMBS originator in China, CCB has sold 65 deals worth Rmb656.8bn under the renowned Jianyuan series, accounting for a 36.5% market share, Wind data showed.
What was more important than CCB’s volume was its contribution — through over five dozen transactions — to promoting Chinese RMBS as an asset class.
That journey began nearly three years ago. Its Jianyuan 2018-2 RMBS was the first RMBS deal sold through Bond Connect. Later that year, CCB sold the first internationally triple-A rated RMBS in China, Jianyuan 2018-11. It did not stop there. The bank continued getting an international rating for selective RMBS deals every year since, a process that can be as demanding as it is costly.
During our awards period, CCB marketed the Jianyuan 2019-10 RMBS — its fourth internationally rated deal — to a broad range of investors both onshore and offshore, while placing the entire class A1 tranche with international accounts. For this transaction, CCB obtained a triple-A rating from S&P Global Ratings and, for the first time, its local subsidiary, S&P Global (China) Ratings. A year later in November 2020, CCB introduced two international ratings — from both S&P and Fitch Ratings — for the Rmb8.4bn Jianyuan 2020-12 RMBS.
CCB focused on innovation, too. In the Rmb11.2bn Jianyuan 2020-2 transaction, it introduced a class B note to the Jianyuan series for the first time. It allocated all four tranches, including the class B, to global investors —a seal of approval for CCB’s credentials outside of China.
As a bank specialised in providing loans for infrastructure projects and the residential mortgage sector, CCB also showed leadership in structured products beyond just RMBS.
By the end of our awards period, the originator was responsible for 26 non-performing loan securitizations under the Jianxin series since the first deal in 2008, accounting for a quarter of NPL ABS issuance onshore, according to Wind. The underlying assets span residential mortgages, corporate loans, credit card receivables, personal consumer loans and personal commercial real-estate mortgages.
It also sells micro-business and corporate loan securitization under the Feichi Jianpu and Feichi Jianrong brands, respectively.
MOST IMPRESSIVE CORPORATE ISSUER
Zhenro Properties Group
In just two and a half years, Zhenro Properties Group has established itself firmly with domestic and international investors. Instead of relying on the traditional onshore bank loan market and expensive trust financing, the real estate developer built a presence not only in the US dollar market, but also in onshore and offshore renminbi and Hong Kong dollars, across both bonds and loans.
Zhenro has come a long way since its IPO in Hong Kong nearly three years ago, following which it has established itself as a liquid benchmark in the single-B rated Chinese real estate market.
Not everyone was a believer when it first started tapping the debt market in 2018. In 2019, the company printed 10 transactions in relatively short tenors and paid high single digit — sometimes double-digit — coupons.
But the developer has always had a clear strategy: to capture every possible market window to form a liquid curve, gradually push out its maturity profile and ultimately lower its cost of funding.
The approach has paid off. In the primary market in 2018, Zhenro paid a 11.5% yield for a $250m two year bond first, and 13.7% for another 2.25 year deal four months later. In its most recent appearance in the offshore market in September 2020, the issuer printed a $350m 4.4 year callable transaction at 7.4%. In the secondary market, its bond prices remained resilient during volatile times and throughout the Covid-19 pandemic.
In dollars, Zhenro has been printing fewer transactions with longer maturities. Four of its five transactions so far in 2020 had tenors of at least 3.25 years. The company also actively looked at a variety of currencies and markets to better manage its capital structure, improve its debt profile and lower its funding costs.
These include a Rmb1bn five year puttable domestic bond sold in China in July, followed by another Rmb1bn four year outing in September. It also made an appearance in the dim sum market in the summer, raising Rmb1bn from a short-term deal.
These continued efforts — and growing sophistication — meant the property developer was able use longer term, cheaper financing from the dollar and renminbi bond markets to replace costly onshore trust loans.
Zhenro was not satisfied with simply doing plain vanilla deals either. Its $200m senior perpetual bond from June 2019 was a rare outing in the format from a single-B rated name, with Zhenro paying a senior-to-perp differential that was tighter than some of its higher rated peers. In its $350m debut green bond this September, the company managed to allocate 34% of the notes to European investors, one of the highest seen for an issuer comparable to Zhenro.
Behind the larger and longer deals, lower yields, strong secondary performance and a more diversified buyer base was the relentless investor work done by Zhenro.
Despite being a frequent issuer, the company always insisted on organising investor calls for every offshore deal. In addition to regular investor updates, Zhenro also goes on non-deal roadshows, including in Europe. The management has also been savvy in engaging and maintaining a good relationship with a mix of Chinese and international investment banks in its transactions. All this makes Zhenro GlobalCapital China’s most impressive corporate issuer of 2020.
MOST IMPRESSIVE SSA ISSUER
Asian Infrastructure Investment Bank
Since starting operations in 2016, the Asian Infrastructure Investment Bank, a Beijing-led multilateral development bank, has funded itself through a series of public bonds, MTNs and private placements. These have been printed across a variety of currencies including dollar, sterling, offshore renminbi, Hong Kong dollar, Russian rouble and Thai baht.
AIIB’s capital market deals stood out this year for the focus it put on offering Covid relief assistance, making it a deserving winner of this award.
After pricing a $2.5bn inaugural dollar bond last year without paying a premium over its global supranational peers, AIIB printed its first sustainable development bond worth $3bn in May, followed by a $3bn outing in September to fund its Covid-19 crisis recovery facility. It also made its sterling debut this year, raising £800m in October.
That wasn’t all. AIIB made its long-awaited Panda bond debut in June, raising Rmb3bn from China’s interbank market to support its Covid-19 efforts.
The quality and scarcity of the deal meant it was much sought after by domestic and international investors, with an impressive 65% allocation to non-Chinese accounts. Behind the 2.78 times covered order book was the Aaa/AAA/AAA rated MDB’s intense marketing efforts: AIIB held dozens of individual investor calls, in lieu of one-on-one and group meetings in the wake of the pandemic.
The pricing was also top notch, despite increased volatility and a lack of liquidity in the market at the time.
The issuer managed to sell the three year deal with a coupon of 2.4%, the lowest achieved for a Panda bond. On a spread basis, the notes landed 23bp inside comparables from the China Development Bank, also the tightest on record for the Panda market.
While the deal was a perfect demonstration of AIIB’s leadership in using capital markets to tackle coronavirus woes, it also marked a milestone for the domestic bond market. This was because the bank was the first internationally triple-A rated issuer to enter the interbank market since China launched new Panda bond guidelines in 2018.
The fast 1.5 month approval process, and the fact that AIIB was allowed to issue the deal without a domestic rating, showed Chinese regulators’ willingness and effort to open up the Panda bond market to high-quality issuers.