Deals of the Year 2019 - Asia-Pacific

Bonds: Corporate

Winner: ChemChina’s $4.95bn multi-tranche and €1.2bn senior unsecured bond

Joint global coordinators and bookrunners: Bank of America Merrill Lynch, Barclays, BNP Paribas, BOC International, China Citic Bank International, Commerzbank, Crédit Agricole, Credit Suisse, First Abu Dhabi Bank, HSBC, Industrial Bank Hong Kong, Morgan Stanley, MUFG, Natixis, Rabobank, Banco Santander, Société Générale, UniCredit

When ChemChina sealed its $43bn takeover of Swiss pesticides and seeds group Syngenta in early 2017, the Chinese state-owned firm took out an enormous bridge loan to finance the merger. This is one of several recent deals that reshaped the global chemicals sector and was the largest ever foreign purchase by a Chinese company.

In March 2018, ChemChina tapped the market to refinance the original bridge loan with the largest bond offering in Asia (excluding Japan) of the year; no less than 18 banks coordinated the issuance.

After a series of investor meetings in Hong Kong, Singapore, Frankfurt, Paris, Abu Dhabi, London and Zurich, ChemChina announced a $6.5bn-equivalent US dollar multi-tranche offering. The €1.2bn senior unsecured bond is the largest single euro-denominated issuance by a Chinese corporation in history, while the remaining $4.95bn was the largest Reg S-only investment grade corporate bond offering in Asia to date. The US dollar-denominated tranches were spread over three-, five-, seven-, 10- and 30-year tranches.

Concerns that the huge size of the issuance would be difficult to absorb for an arguably already oversupplied market were quickly allayed. Initial price guidance was set at 200 basis points (bps) (for the three-year); 220bps (for the five-year); 235bps (seven-year); 250bps (10-year); and 165bps for the euro long four-year paper.

The order book for the US dollar debt built quickly, covering the target size by noon, Asia time – just a few hours after launch. By late afternoon, the book exceeded $12bn, allowing for pricing to be tightened between 15bps and 17.5bps on all tranches. The deal was exceptionally well received, to the extent that ChemChina was compelled to add a $100m 30-year bond based on strong reverse enquiries.

The notes held up well in the aftermarket, despite some market volatility, trading up by 5bps to 10bps across the various tranches. The take-up of the dollar bonds included a larger-than-usual share of non-Asian investors at 35% of the final book, allowing ChemChina to diversify its bondholder base. The large size, tightened pricing, strong aftermarket trading and quality of the order book illustrated the market’s enthusiasm for the tie-up with Syngenta and its wider confidence in Asian G3 bonds.

Bonds: SSA

Winner: Papua New Guinea's $500m senior notes

Joint lead managers and bookrunners: Citi, Credit Suisse

For Papua New Guinea, 2018 was a landmark year. On September 27 it made a successful debut on international bond markets with $500m sovereign notes due in 2028. It was third time lucky for the country, which had considered issuing a government bond in 2013 and 2016, but never made it to market. Moody’s assigned a B2 rating to the paper.

The feat is all the more impressive since macroeconomic conditions going into the final quarter of 2018 were less than rosy. Concerns over the lack of a Brexit deal, the threat of a US-China trade war and rising interest rates combined to fuel negative sentiment, particularly for emerging market issuers.

The timing was crucial, however, as Papua New Guinea had earmarked some of the proceeds for investment in infrastructure and development projects and operational funding for the Asia-Pacific Economic Co-operation summit, which the country hosted in November 2018. The remainder is to be used to reduce its chunky $2.5bn debt burden, of which more than one-quarter is owed to China.

Despite the somewhat gloomy economic backdrop, the debut sovereign bond was a runaway success. The 10-year bond was launched with initial price talk at 9% coupon. Asian and European interest quickly covered the book twice. Overnight US investors piled in, with the final order book 7.6 times oversubscribed, at $3.8bn from 195 accounts. Investor appetite from high-quality tickets allowed Papua New Guinea to tighten the guidance to a 8.375% coupon where the deal eventually priced.

Raising funds through senior notes instead of loans allowed the country to extend the weighted average duration of its debt and diversify away from expensive local borrowing, which has stoked inflation, and the term loans it has had to rely upon. The deal also injected much-needed US dollars into the local economy.

In 2014, resource-rich Papua New Guinea, alongside Exxonmobil, kicked off its PNG LNG project – the country’s most ambitious infrastructure development to date. Though the $19bn project and related construction have done much to rehabilitate its economy, oil prices have slumped in the past few years, denting revenues. However, the success of the inaugural sovereign bond shows that investors have faith in the fiscal and economic policies of the new government elected in 2017.

Corporate carve-outs

Winner: Vinhomes' $2.2bn capital raising

Joint global coordinators and bookrunners: Citi, Deutsche Bank, Credit Suisse, Morgan Stanley

Joint bookrunners: HSBC, Maybank, Saigon Securities

Real estate has been a hot sector in Vietnam in recent years. When the country’s largest conglomerate, Vingroup, announced that it would divest its real estate subsidiary Vinhomes, the news was enthusiastically received. Vinhomes is the largest integrated residential and commercial developer and has the greatest market share, particularly in the high-end and luxury condominium segments.

Vingroup consolidated its real estate operations and subsidiaries into Vinhomes and looked to sell 10% through an initial public offering (IPO). However, going public on Vietnam’s notoriously volatile equity markets is not for the faint-hearted.

The conglomerate ran a dual-track process, pursuing both the IPO as well as a sale. This tactic bore fruit as Singapore-based sovereign wealth fund GIC decided to invest $853m in Vinhomes at a pre-money valuation of $12bn just before the equity offering launched. The fund also signed a non-binding agreement to inject a further $450m directly into four of its upcoming residential developments.

GIC’s endorsement was a great boon for Vinhomes, which set about de-risking the process further by attracting anchor investors into the IPO. Ahead of launch, anchor investor demand came to $1bn, covering 74% of the IPO book. Moreover, the $348m remaining bookbuild tranche was already multiple times covered through further anchor demand.

As intended, the strategy of only putting a small sliver of a large liquid offering out to the open market created a frenzy among investors. The book was covered within three hours of launch and was multiple times oversubscribed. 

There was no price sensitivity in the book, allowing for top-end pricing. Vinhomes listed with a $13.5bn market capitalisation, the equivalent of a 16.9 times 2018 price/earnings multiple. The deal unlocked enormous value for Vingroup, which itself traded up by 44% during the carve-out process and had a market cap of $14.4bn when the IPO priced.

After only one day of trading, Vinhomes was already Vietnam’s second largest public company, behind parent Vingroup. This was the largest ever frontier market equity offering in Asia and the largest deal in south-east Asia in 2018.

Equities

Winner: Geely Group’s accelerated acquisition of a 9.7% stake in Daimler

Joint global coordinators: Bank of America Merrill Lynch, Morgan Stanley

Consolidation in the global automotive sector has ramped up in the first quarter of 2019, with Renault and Fiat-Chrysler hunting for deals and the bonds being tightened between Toyota and Suzuki, as well as Volkswagen and Ford. China-based automotive group Zhejiang Geely was quick off the mark in making smart investments and strategic partnerships.

Geely owns Swedish automobile manufacturer Volvo Cars and has been looking to gain a stronger foothold in Europe. Times have changed from when it scooped up Volvo Cars in 2009 from a then distressed Ford. Antitrust authorities in general do not look too favourably on Chinese ownership of strategic assets and brands.

In 2018, Geely wanted to build a stake in German car maker Daimler because of strategic synergies and long-term growth prospects. In order for Geely to become the largest shareholder, without triggering a regulatory approval process from the German or European authorities, it targeted a 10% shareholding.

This was easier said than done. Daimler is well capitalised and unlikely to tap primary markets, so Geely would have had to purchase the stake via the secondary market. However, Geely was keen to buy the shares in an accelerated way to reduce market exposure risk. To reach its goal, Geely and its advisers devised a new investment structure.

To shorten the time frame, Geely acquired about 3% of Daimler’s shares in the open market, below disclosure thresholds. The rest of the shares were bought through an accelerated block. The company entered into an equity collar transaction on the full 9.7% stake with banks, which needed to build a short position on Daimler shares as a hedge for the collar.

The ingenious structure offered Geely protection below a certain put strike, though it would have needed to pay any upside on the shares above a certain call strike. The deal was the largest single-stock derivative transaction ever achieved, whereby Geely avoided incurring a premium against Daimler’s share price by building its stake in one stroke without falling foul of regulators.

FIG financing

Winner: Shinhan Financial Group’s $500m AT1 notes

Joint bookrunners: Bank of America Merrill Lynch, Credit Suisse, HSBC, JPMorgan, Mizuho

In March 2018, the secondary market for additional Tier 1 (AT1) capital in China went through a mass sell-off, leading many Chinese banks to postpone or cancel planned issuance of these perpetual bonds. Though AT1s can be a useful tool for financial institutions to comply with ever-tighter regulatory capital requirements, the dark mood bled into other Asian markets, casting a pall over hybrid bonds in general.

By mid-2018, secondary markets were normalising, spurring South Korea’s Shinhan Financial Group (SFG) to do a roadshow in June 2018. It held off until markets had stabilised to a higher degree and in early August came to market with $500m AT1 subordinated notes, the first non-insurance ones of the year out of the Asia-Pacific region.

Notably, this was the first ever AT1 issuance by a South Korean financial holding company: SFG owns South Korea’s second largest bank by assets, Shinhan Bank. The rarity of the structure sparked much debate among investors about whether or not a premium was warranted.

Bookbuilding commenced in the morning of August 7, with initial price guidance near 6.25% yield, which was deemed relatively generous. Within three hours the book was twice oversubscribed, but with some price sensitivity around the 6% mark. Shinhan made a bold move, revising price guidance to 5.875% to 6%, a strategic manoeuvre to sway investors sitting on the 6% fence.

The move paid off as SFG was able to price the paper at the tight end of guidance, while still maintaining a quality book, which ended up four times oversubscribed. The 37.5bps tightening from the original price talk was no mean feat.

European investors participated in the deal, taking up 14% of the book, with the remaining 84% going to Asia-Pacific Economic Co-operation investors. The deal set the benchmark for other South Korean and Asian financial issuers, looking to tap the perpetual hybrid bond market. Bank of China Hong Kong followed suit with a $3bn AT1 offering in September. Shinhan not only broke the drought in AT1 issuance in the region, but also breathed new life into the market with its strong performance.

Green finance

Winner: TLFF's $95m multi-tranche sustainability project bonds

Sole arranger and lead manager: BNP Paribas

Facility manager: ADM Capital

Indonesia was the largest source of green bonds in 2018 in south-east Asia with about $2bn issued, in great part thanks to the government’s $1.25bn green sukuk. One of these, albeit a much smaller bond, wins The Banker's Green Finance Deal of the Year award for Asia-Pacific this year. The Tropical Landscapes Finance Facility – one of very few sustainable agriculture issuers globally – came to market in early 2018 with a $95m sustainability project bond.

The senior secured notes are supported by a 15-year amortising loan, partially guaranteed by US government agency USAID. The loan was made out to a joint venture between Michelin and Barito Pacific Group called Royal Lestari Utama (RLU). This is intended to be one of many tranches that will allow RLU to develop a sustainable rubber plantation, which in turn aims to rehabilitate heavily eroded land in two Indonesian provinces.

Occupying some 88,000 hectares of land, the project has the potential to meet up to 10% of Michelin’s global natural rubber demand. Once it is fully operational, the plant is expected to provide 16,000 jobs for local communities, creating a social impact alongside its environmental objectives.

Due to the complexity of the structure and its inaugural nature, the issuer had multiple meetings and discussions with investors ahead of launch. The offering included three tranches: $30m of class A (15 years), $50m of class B1 (five to 15 years), $15m of class B2 (15 years). The bond structure gives RLU access to much-needed long-dated funds, which are hard to come by for standalone projects in the rubber industry. A Japanese life insurance company purchased the full class A tranche, which was assigned an Aaa rating by Moody’s.

Despite its rather diminutive size, the offering broke new ground on several accounts. It was the first sustainability project bond in Asia and the first sustainability bond in the Association of South-east Asian Nations region. Moreover, bankers say it is unusual in that the proceeds will be deployed into a single project, to deliver long-term and profitable investment with real and direct impact.

High-yield and leveraged finance

Winner: Adaro and EMR Capital's financing of an 80% stake in the Kestrel mine

Bookrunners: ANZ, Bank Mandiri, BNP Paribas, CIMB, HSBC, ING, MUFG, National Australia Bank, OCBC, SMBC, Standard Chartered

Anglo-Australian mining group Rio Tinto has gradually been whittling away its coal mines to focus on its iron ore, copper and aluminum businesses. In 2018, it aimed to divest four remaining coal assets, all located in Australia. Two operational mines, Kestrel and Hail Creek, as well as two undeveloped deposits, Valeria and Winchester South, were up for sale.

One of Indonesia’s largest coal companies, Adaro, teamed up with resources-focused private equity firm EMR Capital hoping to acquire one or more of the projects. Because Adaro and EMR were interested in all four of the assets up for grabs, they required creative and scaleable debt structuring to remain flexible.

In March, Adaro announced that its joint venture (JV) with EMR, called Kestrel Coal Resources, had entered into a binding agreement to acquire Rio Tinto’s 80% interest in the Kestrel coking coal mine for $2.25bn. The JV will jointly operate and manage the mine. 

The acquisition was financed through a mixture of debt (60%) and equity (40%), requiring Adaro to raise debt financing of $1.19bn in mid-2019. As investors are increasingly turning away from coal and coking investments, the situation was tricky.

Nevertheless, demand for thermal coal in emerging markets is still very strong. A lack of supply in the sector has made it an attractive place to be, despite the concerns over fossil fuels and their longevity in the face of a growing renewable energy sector.

For Adaro, however, there was a strong rationale for the deal. Kestrel is a world-class, high-quality coking coal asset with a long-life resource base. The acquisition is an important step in the Indonesian miner’s expansion in metallurgical coal, an ingredient in steelmaking.

According to bankers, 12 lenders took a long-term view on coking coal prices and on the risks from a credit perspective. Despite the deal’s large size and complicated structure, which included mezzanine debt, it was done within a tight timeframe.

Infrastructure and project finance

Winner: Lestari Banten Energi's $775m senior secured notes

Sole financial adviser: Citi

Joint global coordinators: Citi, Barclays

Joint lead manager: CIMB

When it comes to infrastructure financing, issuers are not only subject to the long-term prospects of the proposed project, but must also contend with short-term market conditions. When a window presents itself, it is often wise to seize it at the first opportunity. Late 2018 was a very bad time to come to market for any borrower, but particularly for emerging market issuers.

Independent power producer Lestari Banten Energi went on the road in November 2018, but held off until some of the volatility settled in January 2019 to issue $775m senior secured notes with a 20-year maturity. Banten re-engaged investors a day ahead of launch and received indications of interest in excess of $1bn prior to launch on January 29. Initial price guidance in the 7.25% coupon region was well received by investors.

By Asia close and thus London morning, the order book already totalled $2.2bn. Momentum showed no signs of slowing, allowing Banten to put out a rather aggressive final price guidance at 6.875% to 7%. With the final order book 4.25 times oversubscribed, Banten could price the notes at the tightest end of the coupon guidance.

Allocations were spread globally, with a distribution of 45% to the US, 39% to Asia and 16% to Europe. The project bond enjoyed good participation from a high-quality buy-and-hold emerging market investor base. In the aftermarket, the bonds rallied 1 basis point (bps) to 2bps the next morning.

Indonesia-based Banten is indirectly owned by Genting Power (55%), SDIC Power (40%) and PT Hero Inti Pratama (5%). It raised cash via a bank loan in 2013, which this offering helped refinance.

This transaction was the first investment grade project bond out of Asia and the largest bond offering by an Indonesian private sector issuer in the 12 months leading up to the issuance.

Islamic finance

Winner: Indonesia's $1.25bn green and $1.75bn conventional sukuk

Bookrunners: Abu Dhabi Islamic Bank, Citi, CIMB, DBS, Dubai Islamic Bank, HSBC

One of the most innovative and impressive debt transactions out of Asia during 2018 came from a surprising corner. Indonesia is a well-established issuer of Islamic finance, but in March 2018 it made waves when it added an inaugural  $1.25bn green tranche to a conventional $1.75bn sukuk offering, structured as a wakala bond. This was the world’s first green sukuk from a sovereign issuer and the combined $3bn size remains the largest sukuk offering by a non-Gulf Co-operation Council issuer.

Although Indonesia is the world’s largest exporter of thermal coal, the country has put environmental issues firmly on the agenda. Being made up of numerous islands and archipelagos, it is highly vulnerable to natural disasters. As climate change accelerates, so do the risks of rising sea levels and rising temperatures.

The green sukuk will finance a range of environmental causes, including renewable energy and energy efficiency projects, resilience to climate change for highly vulnerable areas, disaster risk reduction, sustainable transport, waste to energy and waste management operations, green tourism and sustainable agriculture.

The green tranche had a maturity of 10 years, while the conventional sukuk had a 10-year tenor. Investors piled into the book, which swelled to more than $7bn, allowing the syndicate to significantly tighten the pricing by 30 basis points on both bonds. The green sukuk landed on a 3.75% coupon, while the regular sukuk priced at 4.4%. The book was filled with high-quality accounts, including green-focused funds and sovereign-related entities, supporting good aftermarket performance.

Indonesia capitalised on the green structure and full investment grade ratings to set all-time low spreads to US Treasuries for any of its previous sukuk offerings.

Against the backdrop of an aggressive interest rate policy agenda set by the US Federal Reserve, bankers say Indonesia has navigated the skittish market well to deliver a landmark transaction, which will likely set the tone for the country’s debt issuance programme for years to come.

Loans

Winner: Bank of Ceylon's $100m syndicated facility with accordion tranche

Sole coordinator: Mashreq Bank

Mandated lead arrangers: Commercial Bank of Dubai, Commercial Bank Qatar, Union National Bank

Sri Lanka had a tumultuous 2018, particularly towards the end of the year when it was gripped by a week-long political crisis. President Maithripala Sirisena dismissed the prime minister and appointed another, without getting the necessary democratic consents to do so. The incumbent prime minister and the majority of Parliament refused to acknowledge the changes, resulting in two concurrent prime ministers. Order was restored in December when the incumbent was reinstated, but in economic terms the damage was done.

Annual economic growth slowed to a 17-year low by the end of 2018, affecting Sri Lanka’s already fragile economy. Simultaneously, primary issuance in global debt markets had all but dried as volatility spiked.

Faced with the difficult market situation and rapidly rising yields, Bank of Ceylon urgently needed to meet immediate funding requirements. The utmost priority was to secure necessary funds before the end of the year, without compromising on price and tenor.

Underwriting bank Mashreq balanced the funding timeline and the underwriting risk by prioritising a first $100m tranche in a two-phase syndication process (most investors were loath to take exposure on Sri Lanka).

This allowed for a quick turnaround to deliver some funds urgently via a club deal with Mashreq and three other underwriting banks. Target investors were sounded out early considering the tight timeline and three Gulf Co-operation Council-based institutions covered the full size of the facility.

To facilitate further funding, the loan built in an accordion tranche to allow seamless inclusion of additional investors. A wider group of investors in Asia and Europe participated in the accordion, delivering a further $30m of funding. The loan has a maturity of one year, but Bank of Ceylon has the option to extend this by another year, subject to consent by the lenders, without the need for additional documentation.

M&A

Winner: Cosco and SIPG’s $6.3bn takeover of Orient Overseas

Adviser to Cosco: UBS

Adviser to Orient Overseas: JPMorgan

The acquirer in 2016’s winning M&A deal for Asia-Pacific makes a second appearance at the top of this category with another sector-transforming deal. State-owned China Ocean Shipping Company (Cosco) closed the largest acquisition ever in the shipping industry. It was also the second largest shipping deal, the biggest being 2016’s winning merger with China Shipping. Again, UBS masterminded the transaction as the sole financial adviser to Cosco.

In July 2018, Cosco and Shanghai International Port Group (SIPG) sealed the acquisition of Hong Kong-based shipping business Orient Overseas (International)’s (OOIL) for an equity value of $6.3bn. The bid represented a 37.8% premium over OOIL’s last closing price.

Shanghai Port, operated by SIPG, has been the world’s largest port in terms of container and cargo throughput since 2010. As such, the pre-determined 9.9% stake SIPG holds in the merged entity is strategic. Closer collaboration between the port and containing shipping operations provides good synergies for both businesses.

At the time of the transaction, the combined entity was the world’s third largest container shipping company, now coming in fourth place. The deal was not without risk, however, as it had to pass anti-trust approvals from China, the EU and the US, as well as clearance from the US-based national security vehicle the Committee for Foreign Investment in the United States. 

Merger control agencies eventually approved the deal, but not without remedies. The parties entered into a national security agreement with the US government to sell off OOIL’s US terminal businesses.

The initial offer was made in mid-2017, almost a year to the day before it closed. In the interim, trade relations between China and the US became increasingly frosty. Investors had initially received the news of the takeover enthusiastically, but became increasingly worried throughout 2018 that US authorities would block the deal. The parties expertly navigated the fraught political backdrop to bring the mega-deal to a successful close.

The deal included a reverse termination fee not related to the merger control processes, whereby Cosco would have had to pay OOIL a reported $253m if the deal fell through for other reasons. UBS worked hard to ensure the transaction would come off.

OOIL’s controlling shareholders had agreed irrevocably to tender their 68.7% shareholding. If the pre-conditions were fulfilled, the agreement immediately secured enough votes for the deal to go through, reducing the risk of a rival bidder stepping in.

Restructuring

Winner: Noble Group’s $5.9bn debt restructuring and deleveraging

Advisers to Noble Group: Moelis & Co, PJT Partners, Comprodor, Houlihan Lokey, Rothschild & Co

Fronting banks: Deutsche Bank, ING

At its zenith in 2011, Singapore-listed commodity trader and supply chain manager Noble Group had a market capitalisation of $11.5bn, annual revenues of over $80bn and access to more than $16bn of bilateral lending facilities across the globe. However, in 2015 commodities prices plunged and have since been slow to recover.

After accusations of accounting irregularities, confidence in the business eroded, which impacted financial performance and led to downgrades by rating agencies. These simultaneously increased the cost of Noble’s outstanding debt and restricted its access to vital trade finance facilities.

The situation came to a head after heavy losses in early 2017 and the resignation of the group’s founder. Material asset disposals to refocus the company on its core Asian hard commodities trading business left it unable to support the residual $3.5bn in unsecured debt. At its lowest point, the price of the group’s bonds fell to 33 cents on the dollar.

A comprehensive restructuring of the balance sheet was negotiated, which included the reinstatement of $1.925bn in debt claims and new perpetual securities with staggered maturities.

Initially, the plan included a re-listing on the SGX exchange in Singapore, however the ongoing investigation into Noble’s accounting practices in 2015 prevented the listing status from being transferred to New Noble. Advisers on the restructuring had to pivot quickly towards an alternative take-private plan. Senior creditors agreed to a debt-for-equity swap worth 70% of the equity of the restructured ‘New Noble’, while 20% went to existing shareholders and 10% to management.

Fronting banks supported the $800m three-year committed trade finance and hedging facilities. Creditors that participated in providing this new money were able to improve recoveries thanks to this innovative elevation mechanism. Noble Group itself came out of the restructuring a much better capitalised company, with a significant cash buffer to accommodate working capital swings.

During the restructuring, its non-trading assets were ring-fenced from its hard commodities business, increasing its future attractiveness for potential strategic partners.

Securitisation and structured finance

Winner: CCB's Rmb10bn Jianyuan 2018-11 residential mortgage-backed securities

Lead underwriter: China Merchants Securities

Joint lead underwriters: Bank of China, China International Capital Corporation, HSBC 

Co-managers: Donghai Securities, MUFG, Standard Chartered

In recent years, China has emerged as a major player in the global asset-backed securities (ABS) market. Its capital markets have been notoriously closed to international investors, but the launch of the Bond Connect scheme in mid-2017 has done much to make onshore renminbi-denominated debt more accessible. The scheme led to a wave of ABS deals in China, eagerly absorbed by the market.

Liberalisation of the rules for issuers has paved the way for a wealth of innovation, including in the residential mortgage-backed securities (RMBS) space. China Construction Bank (CCB) issued an Rmb10bn ($1.5bn) Jianyuan 2018-11 RMBS in mid-2018 to great acclaim. CCB has a long track record in the onshore RMBS market with a good reputation for selling quality products.

First, this was the first time a Chinese onshore RMBS received an AAA rating from any of the three big agencies, in this case Standard & Poor’s. Notably, this is a higher credit rating than that of the sovereign, as China’s credit rating is currently A. In its analysis of CCB’s RMBS securities, S&P noted the strong credit-positive characteristics of the underlying mortgages, such as the full-recourse feature for underlying loans.

The securities were issued across three tranches, class A1 to A3, which priced on the tight end at 4.78%, 4.9% and 5.24% yield, respectively. All three tranches were well oversubscribed and enjoyed a diverse investor base. Class A1 was fully placed with international investors, while class A2 and class A3 were mainly distributed to domestic banks, including state-owned banks, joint-stock banks and city commercial banks.

This landmark structured debt deal lays the foundations for future RMBS transactions to receive an international rating. CCB itself came back to market just three months later with a similar, smaller deal, and bankers say it will likely not take long for other issuers to jump on the bandwagon.