BEST PANDA BOND HOUSE
Bank of China
Bank of China, which has ranked top on the Panda bond league table since 2015, led the way yet again during this awards period with 23 deals, according to Wind. It accounted for over a third of the total Panda market with a 36.2% share — well ahead of second place Industrial and Commercial Bank of China.
The most experienced Panda bond lead underwriter, BOC has taken 85% of foreign issuers to the China Interbank Bond Market (CIBM) over the years.
Its issuer coverage has always been highly diversified, and was reflected in its client roster in 2020 too.
Among the Chinese red chip companies, BOC helped domestic champions like repeat issuer China Mengniu Dairy, as well as debut names such as sportswear manufacturer Anta Sports Products and technology giant Xiaomi Corp tap domestic liquidity. Xiaomi’s transaction set a benchmark for internet companies in the onshore bond market.
BOC’s Panda expertise also went beyond the red chip issuer base. It worked with foreign corporations — including German carmakers BMW and Daimler and French firm Veolia Environnement — as well as financial institutions like Italy’s Cassa Depositi e Prestiti.
During our awards period, BOC led two senior preferred Panda transactions for Crédit Agricole, including its December 2019 debut, which was the first onshore renminbi-denominated bond by a French lender and a European global systemically important bank. The BOC-led syndicate group helped the issuer capture both onshore and international demand and price the Rmb1bn bond at a level comparable to the top domestic Chinese banks.
For CréditAg’s follow-up Panda, an impressive two-thirds of the bond was placed with offshore accounts.
BOC was entrusted by sovereigns and supranationals too. It acted as the lead underwriter and sole bookrunner for the inaugural Panda outing by Asian Infrastructure Investment Bank (AIIB), the first internationally triple-A rated issuer to enter the CIBM since the launch of new Panda bond guidelines in 2018.
The Beijing-headquartered multilateral development bank saw a 2.78 times covered order book and a 65% allocation to non-Chinese investors. The Rmb3bn three year deal was sealed with the lowest coupon for a Panda bond and an unprecedented spread of 23bp below China Development Bank’s curve.
Both the landmark AIIB and Xiaomi Panda transactions were coronavirus-themed bonds, putting BOC at the forefront of using the onshore debt capital markets to combat the Covid-19 pandemic. It was the sole lead underwriter of the first Panda bond with a Covid label, helping private company Hengan International Group Co seal a Rmb1bn transaction at the height of the pandemic in the Mainland in February.
Due to its unrivalled strength in the Panda bond market, as well as for leading the way for Covid-linked transactions onshore, BOC is this year’s best Panda bond house.
BEST BANK FOR ABS
Standard Chartered
Standard Chartered was one of the first foreign banks to participate in the domestic Chinese securitization market. This year marked a milestone for its asset-backed securities (ABS) business in the Mainland.
Having worked as a lead underwriter on nine credit ABS transactions worth nearly Rmb13.5bn during our awards period, StanChart accounted for 0.54% of the total market share, compared to just 0.17% a year ago, according to Wind. It ranked top among all foreign banks in the highly competitive market, rising from sixth place.
Wind data showed that during our awards period, StanChart’s underwriting volume jumped an impressive 245% year-on-year, despite an 11% drop in new issuance in the credit ABS market in China.
Most of that increase came in the first three quarters of 2020, despite Covid-19’s impact on the Chinese economy and the subsequent deterioration in ABS deal flow. Data supplied by the bank shows a volume growth of 312% for the first three quarters for credit ABS and asset-backed note (ABN) markets combined, versus a 20% increase on average for other foreign ABS underwriters.
Backed by an experienced team of securitization bankers and the sales and trading desk in Hong Kong, StanChart also has an ABS team in Shanghai who can originate, structure and execute transactions on the ground. A dedicated China ABS trader has enabled the bank to facilitate secondary trading both onshore and cross border and help improve secondary liquidity for the asset class.
Between January and September 2020, StanChart traded over $800m in Chinese ABS, equal to over a third of its total Asia Pacific ABS trading volume of $2.1bn.
StanChart maintained a good relationship with foreign and joint venture auto finance companies, helping Beijing Hyundai Auto Finance, BMW Automotive Finance (China), Genius Auto Finance, Mercedes-Benz Auto Finance and SAIC-GMAC Automotive Finance to fund in the onshore ABS market this year. It also led China Construction Bank’s numerous internationally rated residential mortgage-backed securitization (RMBS) transactions.
The UK-headquartered firm stepped out of its comfort zone this year too. It took on the sole financial adviser role in Mercedes-Benz Leasing Co’s Rmb4bn debut auto lease ABN in November, setting the stage for the originator to become a regular in the ABN market in the future. The bank adopted an innovative structure for the transaction to suit the originator’s more complicated leasing products, and helped offset the greater balloon payment risk relative to other deals.
StanChart remained committed to promoting the internationalisation of the Chinese securitization market. In addition to continuing bringing global accounts to participate in onshore ABS deals, StanChart also helped the likes of China Merchants Bank and Tianjin Great Wall Binyin Automotive Finance obtain international ratings for their securitization deals for the first time.
Great Wall’s deal also marked the first internationally rated auto ABS from a domestic Chinese auto finance company.
StanChart is already gearing up for a strong start to 2021, with plans to launch credit card and consumer loan ABS transactions in the early part of the year.
BEST BANK FOR SECURITIES SERVICES
HSBC
Securities services is a crucial part of the financial system. By giving investors confidence their trades can settle quickly, and their assets can be held safely, good securities services banks allow fund managers to concentrate on the most important question — where they should be putting their money.
Like film directors balancing the interests of big stars against the reality of technical limitations, securities services bankers too often go unnoticed when things are going smoothly. That is unjust. Much of the heavy lifting to make markets operate efficiently comes from securities services bankers lobbying regulators. China offers a clear example.
China’s bond and equity markets may still need a few improvements but there has been remarkable progress over the last decade on increasing access to foreign investors, improving the speed of clearing and settlement and reducing counterparty risk. HSBC is one of the banks that deserves credit for these changes, pushing regulators to introduce new standards that have helped attract foreign investors while also improving the nuts and bolts of the system for domestic players.
It should come as little surprise that HSBC excels in China’s securities services market, especially for offshore investors buying Chinese assets. Bridging the gap between China and the rest of the world is part of the bank’s DNA. But HSBC’s strength in this particular area is also down to a recent push: it has spent $500m to build its global securities services team over the last two years.
The numbers speak for themselves. HSBC has been hired as a service provider for 108 qualified foreign institutional investors (QFIIs) in China, 111 renminbi QFIIs and 130 investors using the CIBM Direct scheme. It works for around 40% of special segregated accounts using the Stock Connect scheme and around 35% of Bond Connect investors.
It is not the only bank with an impressive offering. Standard Chartered, the winner of this award for the last two years, ran its rival close once again. The two banks have worked together to bring China’s cross-border market to the level of sophistication it is today.
But for its expansive coverage, its major investment in securities services and its razor-sharp focus on China, HSBC deserves to be recognised as GlobalChina’s best securities services bank of the year.