HONG KONG: TMB Bank has issued Thailand's first Dim Sum bond, in an offering that comes amid one of the lowest renminbi-US dollar exchange rates since 2012.
The three-year Reg S senior unsecured bonds priced to yield 5.5 percent to raise Rmb600m (US$96m). The notes were trading slightly above par in the secondary market. The lender garnered an order book in excess of Rmb900m from 48 accounts.
Dim Sum syndicate bankers said they hoped the milestone bond would encourage other non-Chinese entities to tap the market, though they conceded it was unlikely, given how much cheaper it was to issue in US dollars.
The issue also followed an unexpected People's Bank of China move to cut interest rates, something that could devalue the renminbi further and decelerate an already-sluggish Dim Sum market.
TMB's reasons for issuing in offshore renminbi were not entirely clear, though bankers on the deal said that, if issuers were willing to look longer term, there was value in putting out renminbi notes.
"In this market, you've got to be nimble," said a syndicate banker on the deal. "Things can change quickly and, when it comes to China, things are very policy driven. If there is a good window, it's always best to do it, provided you have confidence in the trade. If you hold out, the exchange rate could worsen."
Analysts who cover TMB Bank were slightly more sceptical, and were not sure why it made sense for the firm to issue in a currency with decreasing value. They suggested that it was partially a marketing exercise to establish itself among the bond markets and tap investors interested in buying Dim Sum bonds.
"I'm not exactly sure why they did it," said a Singapore-based banking analyst. "They don't really need it in terms of size or funding. Maybe, it's more of an opportunity to improve the reputation of the franchise and its capital markets position. It will be interesting to see how this deal goes and how markets react to it and if it could spur more issuance from outside China. The demand is there, but it has to make sense for issuers and it doesn't really, at the moment."
HSBC was the sole global co-ordinator and was joint book-runner with ING. Moody's has assigned a Baa2 rating to the bonds, which will be issued off TMB's US$3bn Euro MTN programme. Thailand's Ministry of Finance owns a 26 percent stake in the bank.
The vast majority of investors came from Asia at 99 percent, with Europe at 1 percent. Fund and asset managers made up 62 percent of orders, while private banks and banks accounted for the remaining 38 percent.
While not the largest of deals, and an order book that was fairly oversubscribed for a Dim Sum, but not for the broader marketplace, bankers will be pleased to have finally gotten a Thai CNH deal off the ground.
Last October, Bangkok-based coal-mining firm Energy Earth was forced to pull its proposed three-year 10 percent bond due to poor market sentiment. In November 2013, Ananda Development pulled a 9.5 percent three-year bond offer for similar reasons.
Bankers on the TMB deal said that investors felt more comfortable with an investment-grade name and suggested that the firm could issue bonds in G3 currencies relatively soon as part of its EMTN programme.
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