BEST SYNDICATED LOAN
South32 $1.5bn loan due 2020
Joint bookrunners: Barclays, Mitsubishi UFJ and Westpac
If you had to pick an ideal credit story for a syndicated loan it would not have been South32. The resources company wanted funding to support its initial debt and liquidity requirements after being spun out from mining giant BHP Billiton.
Unfortunately, all the press around the merger was that BHP was dumping the assets it didn’t want and its hunt for funding coincided with falling commodity prices. Add to that the complexities of detangling from one of the country’s biggest corporates and it was clear a successful syndication was not a forgone conclusion.
But leads Barclays, Mitsubishi UFJ and Westpac put the company through a rigorous credit process and took time to explain the company as part of the syndication process. That gave confidence to the 12 domestic and international lenders that came into the transaction with the $1.5bn loan ending up oversubscribed.
BEST PROJECT FINANCING
WestConnex A$1.5bn loan due 2022
Mandated lead arrangers and bookrunners: Commonwealth Bank of Australia, Crédit Agricole, National Australia Bank and Westpac
Ask an Australian bank if they want to lend money to a toll road project and the answer is likely to be no. Toll road projects do not have a good track record in Australia. With a few exceptions, they have failed to meet their target traffic numbers, struggled to make repayments and banks that have lent to them have had to take control of the project.
It was against that backdrop that WestConnex wanted to raise A$1.5bn for stage two of a project to reduce congestion on the main road links around Sydney.
As one of the bankers who led the transaction told Asiamoney, his first response was to turn it down. But what eventually got the mandated lead arrangers onside was the unique nature of the project. Firstly the syndicate would have access to cash flows from an existing toll road that fed into stage two of the route. It also benefited from $3.3bn of equity provided by the governments of Australia and New South Wales.
Even then the leads knew they would have their work cut out in syndication as some banks had got their fingers burnt in the past, but such was their confidence they underwrote the whole facility and later managed to syndicate the loan among a number of banks.
BEST LEVERAGED FINANCING
TPG Telecom A$1.96bn multi-tranche financing
Mandated lead arrangers and bookrunners: ANZ, National Australia Bank and Westpac
When TPG Telecom needed to secure a funding package in the quickest possible time for its transformational acquisition of iiNet, it brought in ANZ to solely underwrite A$1.96bn in syndicated loan facilities to back the bid.
In less than two weeks, ANZ was able to put a together a package comprising a A$1.25bn partially amortising facility, a A$400m bullet facility, A$260m bridge and a A$50m working capital facility.
Once the package was in place, ANZ decided on a two phase sell-down strategy. Firstly the transaction was significantly de-risked via a sub-underwritten phase within two weeks from original underwritten commitment. This was then followed by a successful general syndication to a group of onshore and offshore banks.
And despite the volatile market back drop during the syndication period, 14 of the 16 banks invited to participate took up the offer with substantial pockets of liquidity coming from Asian, European and North American lender, much of it from banks new to TPG’s credit. This was in addition to large holds from National Australia Bank and Westpac.
The transaction was Australia’s largest syndicated loan in 2015 and one of the largest sub-investment grade underwrites in recent years.
BEST LOANS HOUSE
Westpac
Westpac put in an impressive performance in the loan market during 2015 despite a market backdrop that meant that syndications faced some of their toughest challenges in recent years.
Despite the caveats about league tables not telling the whole story, bankers at Westpac have a right to be pleased to have dislodged long-time loan powerhouse ANZ from the top bookrunning spot. Westpac received league table credit for 34 deals worth $9bn to firmly cement its place at number one.
And it did so while acting as the sole bookrunner for 11 transactions such as CBH Grain’s A$950m facility. Westpac says the sole mandates show that clients have confidence that it will be able to successfully syndicate a transaction. This has certainly been the case, which Westpac in part attributes to its reputation for a having a stringent credit process. If a company makes it through Westpac’s watchdogs, this is usually enough to provide confidence to lenders who want to join. This was a strong plus against a backdrop of falling commodity prices and volatile global markets.
Westpac was also in nimble in providing financing for the uptick in M&A situations in a year where refinancings provided fewer opportunities.
And it can boast a bookrunning spot on all three of the loans we have rewarded as part of this awards process: South 32’s $1.5bn syndication, WestConnex’s A$1.5bn project financing and TPG Telecom’s A$1.96bn leveraged financing. Westpac is a well-deserved winner of best loans house.
BEST INTERNATIONAL BOND
APT Pipelines $2.3bn dual currency three tranche bond
Joint bookrunners: BNP Paribas, HSBC, National Australia Bank and RBS
The management of Australia’s largest natural gas infrastructure company cannot be accused of wasting time. The company was looking to raise debt funding for its $5.11bn acquisition of the Queensland Curtis LNG Project and was on the road meeting investors for a bond deal before the transaction had reached financial close.
The acquisition was being funded by a mixture of debt and equity and with such large sums involved APT Pipelines knew any bond would require targeting investors in multiple jurisdictions. So management went on a roadshow to Asia, Europe and the US to explain the credit and the rationale for the acquisition.
Feedback from the European leg of the roadshow was particularly positive and resulted in substantial lead orders. And with European markets performing particularly well the leads decided to launch — opening books for seven and 12 year euro tranches and a 15 year sterling tranche.
Books built quickly with all three tranches heavily oversubscribed after just a few hours, allowing the leads to tighten pricing. The €700m seven year priced at mid swaps plus 100bp, the €650m 12 year at mid swaps + 130bp and the £600m 15 year at 142bp over Gilts.
This was despite the fact that the acquisition was yet to be completely signed off. But investors were reassured by a put option that allowed them to return the notes if the deal fell apart.
As well as securing funding for its acquisition, the borrower also made its debut in euros at a level comfortably under where it would have funded in the US dollar market.
BEST LOCAL CURRENCY BOND
Asciano Finance A$350m bond due 2025
Joint bookrunners: ANZ, Citi and Westpac
In a booming year for Australia’s local currency bond market, there was a strong roster of noteworthy deals making this a tough category to judge. What tipped the balance in favour of Asciano Finance’s A$350m 10 year note was how it changed the market perception of what is possible for triple-B rated credits.
The transaction was the first public 10 year deal for a BBB-rated issuer since 2010. No mean feat considering the freight logistics company was also making its debut in the domestic market.
Not that Asciano had no track record as it had issued bonds in the international debt market and this was reflected in its marketing strategy which took in meetings in Japan and Singapore as well as Australia. It ended the roadshow with two large anchor orders that took 45% of the final book and helped drive order momentum for when books for the trade opened.
Asciano was able to price its bond comfortably inside its offshore comparables at a coupon of 5.25% and in a further sign of development in the domestic market it issued the transaction under a light covenant package that was in line with its offshore debt.
BEST SECURITIZATION
Latitude Financial Services A$6.7bn deal due 2018
Arrangers: Deutsche Bank, KKR and Värde Partners
The financing package that accompanied the acquisition of GE Consumer by Deutsche Bank, KKR and Värde Partners from its parent was a first of its kind for the Australian market.
The challenge was devising a structure that worked for GE Consumer’s asset portfolio. It had more than A$7bn of receivables across point of sale finance, credit cards and personal loans.
Another hurdle was that most warehouse lines of credit in Australia are only available for typically 12-24 months. Given that GE Consumer was being spun out and would have new systems and organisation, the consortium wanted funding that would cover at least the first 12-18 months.
And of course timing was key considering the competitive nature of auctions.
The solution saw the consortium identify the portions of GE’s business that banks would be most comfortable underwriting and then they were able to negotiate a rare three year warehousing tenor. The innovative solution delivered in a matter of weeks was key to the consortium winning the bid for GE Consumer, making it a worthy winner in this category.
BEST BOND HOUSE
National Australia Bank
The bond franchises of banks operating in Australia tend to bifurcate between those with very strong domestic operations and those with better international expertise. But National Australia Bank wins this award for the ability of its bond team to both service the local Australian dollar market and act for Australian companies who want to raise funds offshore.
While it is true NAB does not dominate either in AUD or for international issuance — sitting outside the top three for both — it is the balance of its franchise which gives it an edge. In 2015, the bank was fourth for Australia domestic DCM and sixth for Australian international debt.
This breadth is reflected in the range of transactions NAB worked on throughout the year. In the domestic market a A$700m bond from Rabobank opened the Kangaroo bank for Basel III compliant debt while a A$1bn note for BHP Billiton Finance was the largest domestic corporate bond since 2012.
Work in recent years to building teams Hong Kong, London and New York means NAB has also increasingly been able to help raise funds offshore for Australian corporates. This includes the $2.3bn equivalent three tranche bond for APT Pipelines which saw the issuer make its debut in euros and is Asiamoney’s pick as international bond of the year.
The widespread expertise NAB is able to demonstrate on Australian debt markets both at home and abroad is what makes it a natural candidate for the country’s best bond house.
BEST IPO
Link Administration Holdings A$946.5m IPO
Joint bookrunners: Citi, Deutsche Bank, Macquarie Capital and UBS
Sole financial adviser: Rothschild
The biggest deal in a market is always eye catching but what makes the IPO of Link Administration Holdings an award winner is the successful execution of the marketing and pricing strategy.
From the start the deal was going to be large. The company was raising money to allow existing shareholders to realise some of their investment and also pay down debt. As the largest provider of fund administration services to Australia’s superannuation industry, the company already had a strong story to tell but the leads also decided to pitch the future value of the company based on its acquisition of Superpartners a year earlier. Link is expected to extract plenty of synergies from the acquisition over the next few years that meant investors that got into the company at the time of the IPO knew that the company would benefit from that future growth.
So the leads embarked on a global roadshow that targeted close to 230 investors through one-on-one meetings in six countries across Australia, Asia, Europe and North America. That process was also used to identify potential cornerstones and the deal was launched having already secured $100m from fund AustralianSuper.
The IPO ended up pricing at the top of its A$5.41-A$6.37 range with institutional tranche more than 10x subscribed, driven by long-only institutions, causing the shares to pop 11% on their first day of trading.
BEST FOLLOW-ON/ACCELERATED BOOKBUILD
Caltex Australia A$4.725bn secondary placement by Chevron Corp
Sole bookrunner: Goldman Sachs
When Chevron Global Energy wanted to sell down its stake in Australia’s biggest petroleum distributor Caltex, secrecy was paramount. Chevron had been associated with Caltex since 1900 and has been a public shareholder since the IPO in 1980 so the fact it was making its first sell-down had the potential to seriously negatively affect the share price.
Chevron brought in Goldman Sachs to discuss the best options including whether it should do a full or partial sale. The details were hammered out over an eight week period including providing timetables for multiple sale options to provide the greatest flexibility. In the end Chevron decided to exit from Caltex, selling 135.0m shares. The sale was underwritten at a floor price of A$34.20, a 9.7% discount to the last close but thanks to the confidential nature of the discussions Caltex share price had remained comfortably above that level in the run up to the transaction and the deal closed at A$35.00 per share, or a 7.6% discount.
Adding to the deal’s award winning credentials, it ranks as the largest ever block trade in Australia, the largest ever sole bookrun equity transaction in Asia ex-Japan and the largest sole bookrun trade globally since 2011.
BEST EQUITY-LINKED
AMP A$275m wholesale capital perpetual notes
Joint bookrunners: JP Morgan, National Australia Bank and UBS
Capital hybrid trades in Australia have typically been sold more like an equity transaction. The bonds open for subscription, investors including retail accounts place orders and then the bond is listed on the Australia Securities Exchange (ASX) in what is a rather lengthy process.
Asset manager AMP wanted to raise capital in a way that minimises the market risk associated with such a long bookbuilding process and decided to sell its debut additional tier one issue into the wholesale market which is only open to institutional investors.
Once the mandate had been announced, AMP held a series of one-on-one meetings with investors in Sydney and Melbourne. Education was key. Not only was it the borrower’s debut capital outing, it was the first non ASX-listed capital transaction and also the first non-listed franked instrument.
Positive feedback from the meetings gave the leads confidence to launch the deal at a size of A$150m but such was the demand that the trade eventually raised A$275m and priced in line with guidance at BBSW plus 400bp. Following the success of AMP, Bank of Queensland followed up with its own wholesale capital notes a few months later.
There were far bigger equity-linked transactions in Australia last year but AMP’s notes take the title for breaking the mould and opening up a new avenue for capital funding.
BEST EQUITY HOUSE AND BEST INVESTMENT BANK
UBS
UBS proved it was a force to be reckoned with in Australian markets during 2015. Its list of M&A deals reads like a who’s who of corporations in Australia, it regained the top spot for ECM and retained a strong presence in the domestic bond market.
Its performance has been an impressive return to form for the bank after a few years when its rivals showed more impressive gains and mounted credible challenges to its position.
UBS worked on a number of standout deals last year. In M&A, it advised BHP Billiton on its A$9.4bn spin-off of South32 as part of the mining giant’s reorganisation to focus on its core divisions. It is also a financial adviser to a consortium comprising Qube Holdings, Global Infrastructure Partners, the Canadian Pension Plan Investment Board and CIC Capital on a $9bn bid for rail logistics company Asciano. It was held off from the top of the league table by Macquarie but came a close second for completed deals with $29.2bn of league table credit. In equities, UBS made a strong return to the top of the league table this year, securing $9.37bn of league credit and a 21% market share that gave it a comfortable lead over its market rivals.
And in a period that featured a bunch a blockbuster deals, UBS was more often than not in the driving seat. It worked on four of the year’s largest IPOs including the leading contender — Link Administration Holding’s A$946.5m listing which is also Asiamoney’s pick for IPO of the year.
The bank also has bragging rights as the leading dealer of follow-on transactions for the year, a feat it ascribes in part to its strong brokerage unit which gives it an insight into where investor demand lies and the ability to quickly bring those investors into a trade. One consequence of this is the increasing number of sole mandates UBS won for sizeable block deals. Its roster of solo achievements includes a A$945m block trade in Healthscope and an A$406m sell-down in Sydney Airport.
Not that UBS does not face an impressive challenge from its rivals. Last year’s winner Macquarie Bank continues to dominate in IPOs while Goldman Sachs has scored a number of marquee transactions across products, but they also serve to highlight the strength of the resurgence in UBS’ equity capital markets business.
For its strong M&A capability, its resurgent ECM business and an ability to working on a large breadth of transactions while continuing to innovate and create value for investors and companies, UBS is a deserving winner of best equity house and best investment bank.