Hong Kong Bankers Rush Bond Deals to Avoid Late Day Protests

(Bloomberg) -- Some Hong Kong and Chinese dollar-bond borrowers compressed their public book-building periods this week in a rush to get deals done sooner amid protests during work hours in the city’s business district.

Greenback notes in Asia sold to local investors as well as those in Europe are typically priced after 8 p.m. local time but escalating clashes have spurred deals to close hours earlier this week. China Aluminum International Engineering Corp. and Dexin China Holdings Co. priced their respective dollar bonds before 5 p.m.

Hong Kong is a major Asian hub for investors buying dollar bonds. Bankers are having to adapt in the wake of one of the city’s most turbulent weeks since protests started in June. Some investors are leaving their offices early as protesters block rush-hour traffic and subway stations are shut sooner. Volleys of tear gas firing outside offices on lunch breaks are becoming a common sight as major banks urge employees in the city to take precautions.

While demand has stayed firm despite the shorter execution times, dollar bond issuance in Asia outside Japan has more than halved to $4.3 billion this week through Thursday from the same period a week earlier, data compiled by Bloomberg show.

“The pace of new bond deals have definitely slowed from that of last week but I don’t think demand has dropped in the meantime. Inflows to the Asian dollar bond market have been largely unaffected,” said James Hu, executive director & senior portfolio manager at Income Partners Asset Management HK. But some of his client and issuer meetings have been postponed or canceled, he said.

Nov. 14China Aluminum Intlout around 1:29PM HKTat around 4:43PM HKT
Nov. 14Shanghai Electric Groupout around 4:15PMat around 7:57PM
Nov. 13Nanyang Commercial Bankout around 3:05PMat around 6:39PM
Nov. 13ICBC Financial Leasingout around 4:05PMat around 6:46PM
Nov. 11Road Kingout around 4:39PMat around 6:45PM
Nov. 11Dexin Chinaout around 9:15AMat around 4:51PM

Sentiment on Hong Kong issuers has weakened since June. Returns on their bonds have become the worst among investment-grade notes in Asia, racking up only 2.7% for investors, according to an ICE BofAML Index. Spreads on some Hong Kong high-grade dollar bonds including New World Development Co. and Nan Fung International Holding Ltd. widened on Thursday afternoon after Global Times said in a since-deleted tweet that the government is expected to announce a curfew for the weekend.

Hong Kong Bankers Rush Bond Deals to Avoid Late Day Protests

“Unrest in the city is having an impact on our jobs but is still manageable as my company allows flexible work arrangement,” said Hu of Income Partners Asset Management.

©2019 Bloomberg L.P.

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