SINGAPORE (Apr 16): Reuters’ financial and risk business, Refinitiv, found that Asian financing volume remain strong despite a slump in March.
In a webinar conducted by Refinitiv, Steve Garton, Editor of IFR, Asia said that 1Q20 ranks as the third biggest quarter for bond issuance in G3 currencies – USD, EUR and JPY – from Asia, excluding Japan and Australia with a total of US$89.6 billion ($127.3 billion).
In 1Q20, January was the biggest month on record for Asian G3 bonds, with US$49.0 billion issued. But from Mar 12 to 30, no Asian issuers sold G3 bonds. On the other hand, the US investment-grade corporate market printed US$256.5 billion of new USD bonds in March, marking a monthly record.
Asian credits sold off heavily in March also and investment-grade benchmarks have since recovered. But some credits have yet to rebound. This is especially apparent in those in the oil and gas sector.
Although April is not yet over, this month seems to be much busier in Asia, thanks to big deals from Indonesia, China’s Baidu, Malaysia’s Petronas, and more.
In terms of equity raising, 1Q20 was the slowest start to a year for Asian equity since 2016, with only US$43.5 billion raised. And unlike in previous crises, China has not restricted A-share issuance to support the markets. However, onshore China IPOs grew 3 times during the first quarter of this year and the pace remains high.
China continues to dominate the Asia IPO pipeline, and Hong Kong is the most popular listing venue.
According to Refinitiv’s data, jumbo equity issues slated for 2020 include China Bohai Bank in Hong Kong (up to US$3 billion); China Yangtze Power in London (up to US$5 billion); and JD.com’s secondary listing in Hong Kong (up to US$5 billion).
Regionally, Garton notes that the IPO market in Southeast Asia is a small one, that totalled some US$3.48 billion this year. This is a huge surge from the year before due to several retail IPO in Thailand. But on the outlook, REIT deals will be difficult to get done as many of the properties are affected by the Covid-19 outbreak.
Reuters conducted a poll from Apr 1 to 3, where 28 economists responded, and found that the majority 39% of the respondents believe that the global economy will start to rebound in about three to six months, while 29% are confident that the rebound will start in less than three months, and 25% think this will only happen in six to 12 months later.
Meanwhile, the mergers and acquisitions (M&A) scene seems to be rather uncertain for the rest of this year.
Deal makers initially began the year in optimistic mood, but with more uncertainties surrounding the Covid-19 outbreak globally, much remains to be seen.
Refinitiv’s Deal Makers Sentiment Survey findings revealed an overall broadly positive trajectory, with expectations for growth widely held, particularly in M&A. But this survey was conducted in the final weeks of 2019, before the world saw the extent of the Covid-19 outbreak.
The survey’s respondents anticipated 2020 M&A deals to increase by 4.7% compared to 2019, with the biggest jump in positive sentiment at the start of 2020 in Asia.
Refinitiv’s Deals Intelligence senior analyst, Elaine Tan, said that a lot “remains to be seen” in the M&A space as several uncertainties make it difficult to forecast. Nonetheless, Tan notes that there have been an increase in deals from the healthcare sector.
