This is a smart comment raising by Khazanah, great advised by a investment bankers involved. This enabled Khazanah to lock in better than 0 rates funding. It is additionally potentially giving up a interest (i.e. offering around stream price) in Parkson Retail. Only when PR moves many higher will down remuneration holders sell in to PR shares, technically during slightest 5%-7% upside from here prior to they cruise switching. Its a great strategy if we consider PR does not present many serve upside (more than 20% over a subsequent 2-3 years). Even so, locking in better than 0 rates has to be worth something many more, Khazanah would be paying during slightest 2.5% we think, so thats a $ 7m savings a year during least.
The other consideration is a USD exposure. Make your own conclusions. Some listed Malaysian companies might want to cruise such equity-exchangeable holds as alternative comment raising - of march if a in a same listed vehicle, afterwards a essentially a automobile bond. Some companies reason obtuse stakes in other listed vehicles, which might be a approach to go. we am meditative about Vincent Tan's Facebook stake, sigh, we consider this advice alone is worth RM2m ... somebody write me a cheque!!! If a Facebook, as great as prior to listing, we consider VT can lift supports during WAAAY next 0 rates. Say Facebook is going for an IPO cost of $ 90 a share - VT could issue a down remuneration to lift a similar volume though automobile during $ 120 over 3 years. This way, we lock in a great offering price, possibly disastrous rates, might be -5% for $ 500m (provided VT has better make use of to reinvest a $ 500m of march ... might be Ananda's power assets, locking in a yields differential). .... OK give me my fees now!!!
FINANCEASIA:KhazanahNasional last night returned to a equity-linked marketplace with a $ 358 million equivalent Islamic bond, which was aggressively priced as great as reliable which there is in truth huge investor appetite for deals backed by clever credits. The holds have been equivalent in to Hong Kong-listed Parkson Retail Group as great as have been backed by Khazanah's superfluous 220 million shares in a association a single of a largest national department store operators in China.
The understanding attracted some-more than $ 1.5 billion of direct as great as great over 100 investors. It was additionally priced during many appropriate conditions for a issuer, including a slight disastrous yield. This meant it pushed a pouch a bit serve than triple-A ratedTemasek, which issued dual equivalent holds in a fourth quarter last year during a 0 coupon as great as 0 yield.
The actuality which Khazanah is a investment arm of a Malaysian supervision as great as therefore noticed as a top-quality issuer was clearly partial of a attraction, though a ability to hedge a underlying equity, a miss of equity-linked supply so far this year as great as a single after another optimism about a China consumer story all helped draw investors in to a deal, sources said. Parkson might no longer be growing during 30% to 40% every year, though it is still noticed as a great story, a single source said. However, accord! ing to B loomberg data, twenty-two of a 28 analysts covering a batch now have a "hold" recommendation upon it. The rest have been separate uniformly in between "buy" as great as "sell".
This is a initial time in four years which Khazanah is drumming a equity-linked marketplace as great as a fourth time which it sells equivalent holds which have been agreeable withShar'iahlaw.The many recent deal, in Mar 2008, was additionally equivalent in to Parkson.Indeed, a apportionment of a shares underlying this ultimate understanding have been additionally underlying a previous bond, of which 55% is still outstanding.
However, a 2008 holds have been great out of a money as great as have been not expected to be exchanged for equity prior to they mature in Mar subsequent year. As a result, Khazanah has received capitulation fromShar'iahscholars to make use of those same shares to behind a brand brand brand new transaction. The 220 million shares comment for 7.8% of Parkson's share capital as great as during a final terms, a sum distance of a brand brand brand new equivalent down remuneration is $ 357.8 million.
The bonds, or 0 periodic remuneration equivalent certitude certificates as they have been called for a role of complying withShar'iahlaw, have a seven-year maturity, though can be put behind to a ! issuer a fter 3 years during a cost of 99.25. The prolonged superfluous majority after a put referred to as a certificate-holder optional dissolution is a reflection of a actuality which interest rates have been during record lows right now as great as Khazanah is receiving a opportunity to lock bondholders in for an a single some-more dual years during which same rate if they decide not to put a holds behind after 3 years. The normal make use of is to leave usually dual years after a put, i.e. a five-put-three or seven-put-five maturity. There is additionally an issuer call after 3 years, subject to a jump of 130%.
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The coupon, which upon Islamic issues is referred to as a periodic payment, was bound during 0 percent during launch, though a produce was offering in a operation in between -0.25% as great as 0 percent as great as a acclimatisation reward came during 25% to 30%. As noted, both were bound during a issuer friendly end, resulting in a produce of -0.25% as great as an sell reward of 30% over Parkson's shutting cost of HK$ 9.71 yesterday. The latter gave an initial sell cost of HK$ 12.623 a turn which Parkson hasn't traded upon top of since Feb 2011.
This is a initial non-yen equity-linked understanding in Middle East with a disastrous produce since May 2011 whenTaiwan's United Microelectronics Corp sole $ 500 million of automobile holds with a produce of -0.25% as great as a 39% acclimatisation prem! ium. However, which understanding was related to a brand brand brand new Taiwan dollar, although it was staid in US dollars. Looking during dollar-denominated transactions, there hasn't been any issues with a disastrous produce since 2009.
The Khazanah holds traded up to about 101 in a grey marketplace during a two-and-a-half-hour bookbuilding, which boosted investor confidence in a understanding even further.
The buyers enclosed a mix of investors, including normal CB hedge supports as great as undisguised investors, though additionally a lot of cross-over accounts, some credit accounts as great as some true equity accounts, a single source said. The direct from Islamic investors was reduce than upon Khazanah's previous equivalent sukuk, however, which might partly be due to a actuality which they take longer to have in! vestment decisions. Following a genuine estate crisis in a Gulf segment there have been additionally fewer investors seeking during item classes outward of true bonds, a single spectator said.
The source estimated a Islamic, or Middle Eastern, direct during about 20% of a total, with Middle East accounting for about 50% as great as Europe a superfluous 30%. Khazanah's ultimate dual Islamic exchangeables a 2008 understanding in to Parkson anda 2007 understanding in to Malaysia-listed Plus Expressways got about 50% of direct from a Middle East
The ultimate holds were marketed ! during a cre dit spread of 150bp, a dividend produce of 2% as great as a batch steal cost of 50bp. Sources remarkable which there is plenty of steal available in a market, though in box it becomes some-more formidable to access later on, a bookrunners will yield steal by a batch lending agreement with Khazanah.
At a final terms, this translated in to a 92.8% down remuneration floor as great as an pragmatic sensitivity of about 27%, which compares with a ancestral vol of about 35%.
The understanding came after dual Hong Kong-listed companies tapped a automobile down remuneration marketplace for a combined $ 434 million upon Tuesday, respirating brand brand brand new life in to a marketplace which had seen usually 3 deals so far this year. The dual issuers 361 DegreesandChina Overseas Grand Oceans Group offering dual very opposite deals in a sense which a single of them was noticed as utterly costly (361 Degrees) whilst a other a single was very cheap. Both saw great demand, however, su! ggesting which investors have been happy to make use of a CB marketplace as a less unsure approach to gain bearing to Asian equities as a regional markets continue to redeem from last year's slump.
Earlier in a year, CB investors were very discreet about deals which were not hedgeable as great as pronounced they would cite to see some-more paper from high-grade issuers. Khazanah seems to have listened, as great as a decision to monetise a superfluous shares in Parkson a year ahead of a majority of a initial equivalent has clearly paid off if a holds aren't exchanged in to equity, a association is even getting paid to take investors' money for during slightest 3 years.
Khazanah invested $ 69 million in to Parkson during a time of a Hong Kong IPO in Nov 2005and when a Malaysian investment association issued a initial equivalent in to a batch it owned about 9.8% of a company. The 2008 equivalent was sole concurrently with a $ 96.8 million placement, which marked down Khazanah's overall interest as great as left 220 million shares (adjusted for a five-for-one batch split) to behind up a $ 550 million exchangeable.
About 45% of which initial down remuneration was put behind in Mar 2011, withdrawal about 110 million shares still scored equally up in which exchangeable. The understanding is equivalent in to equity during a cost of HK$ 19.45 per share, as great as given which a batch is now trading during about half which cost it is doubtful which it will ever be converted. However, if a share cost were to recover, Khazanah has a choice to solve a sell of both holds in cash, definition there is no risk which it will get caug! ht out w ith too couple of shares t! o delive r to investors upon possibly deal.
The equivalent was jointly organised byCIMB,Deutsche BankandJ.P. Morgan.
The other consideration is a USD exposure. Make your own conclusions. Some listed Malaysian companies might want to cruise such equity-exchangeable holds as alternative comment raising - of march if a in a same listed vehicle, afterwards a essentially a automobile bond. Some companies reason obtuse stakes in other listed vehicles, which might be a approach to go. we am meditative about Vincent Tan's Facebook stake, sigh, we consider this advice alone is worth RM2m ... somebody write me a cheque!!! If a Facebook, as great as prior to listing, we consider VT can lift supports during WAAAY next 0 rates. Say Facebook is going for an IPO cost of $ 90 a share - VT could issue a down remuneration to lift a similar volume though automobile during $ 120 over 3 years. This way, we lock in a great offering price, possibly disastrous rates, might be -5% for $ 500m (provided VT has better make use of to reinvest a $ 500m of march ... might be Ananda's power assets, locking in a yields differential). .... OK give me my fees now!!!
FINANCEASIA:KhazanahNasional last night returned to a equity-linked marketplace with a $ 358 million equivalent Islamic bond, which was aggressively priced as great as reliable which there is in truth huge investor appetite for deals backed by clever credits. The holds have been equivalent in to Hong Kong-listed Parkson Retail Group as great as have been backed by Khazanah's superfluous 220 million shares in a association a single of a largest national department store operators in China.
The understanding attracted some-more than $ 1.5 billion of direct as great as great over 100 investors. It was additionally priced during many appropriate conditions for a issuer, including a slight disastrous yield. This meant it pushed a pouch a bit serve than triple-A ratedTemasek, which issued dual equivalent holds in a fourth quarter last year during a 0 coupon as great as 0 yield.
The actuality which Khazanah is a investment arm of a Malaysian supervision as great as therefore noticed as a top-quality issuer was clearly partial of a attraction, though a ability to hedge a underlying equity, a miss of equity-linked supply so far this year as great as a single after another optimism about a China consumer story all helped draw investors in to a deal, sources said. Parkson might no longer be growing during 30% to 40% every year, though it is still noticed as a great story, a single source said. However, accord! ing to B loomberg data, twenty-two of a 28 analysts covering a batch now have a "hold" recommendation upon it. The rest have been separate uniformly in between "buy" as great as "sell".
This is a initial time in four years which Khazanah is drumming a equity-linked marketplace as great as a fourth time which it sells equivalent holds which have been agreeable withShar'iahlaw.The many recent deal, in Mar 2008, was additionally equivalent in to Parkson.Indeed, a apportionment of a shares underlying this ultimate understanding have been additionally underlying a previous bond, of which 55% is still outstanding.
However, a 2008 holds have been great out of a money as great as have been not expected to be exchanged for equity prior to they mature in Mar subsequent year. As a result, Khazanah has received capitulation fromShar'iahscholars to make use of those same shares to behind a brand brand brand new transaction. The 220 million shares comment for 7.8% of Parkson's share capital as great as during a final terms, a sum distance of a brand brand brand new equivalent down remuneration is $ 357.8 million.
The bonds, or 0 periodic remuneration equivalent certitude certificates as they have been called for a role of complying withShar'iahlaw, have a seven-year maturity, though can be put behind to a ! issuer a fter 3 years during a cost of 99.25. The prolonged superfluous majority after a put referred to as a certificate-holder optional dissolution is a reflection of a actuality which interest rates have been during record lows right now as great as Khazanah is receiving a opportunity to lock bondholders in for an a single some-more dual years during which same rate if they decide not to put a holds behind after 3 years. The normal make use of is to leave usually dual years after a put, i.e. a five-put-three or seven-put-five maturity. There is additionally an issuer call after 3 years, subject to a jump of 130%.
The coupon, which upon Islamic issues is referred to as a periodic payment, was bound during 0 percent during launch, though a produce was offering in a operation in between -0.25% as great as 0 percent as great as a acclimatisation reward came during 25% to 30%. As noted, both were bound during a issuer friendly end, resulting in a produce of -0.25% as great as an sell reward of 30% over Parkson's shutting cost of HK$ 9.71 yesterday. The latter gave an initial sell cost of HK$ 12.623 a turn which Parkson hasn't traded upon top of since Feb 2011.
This is a initial non-yen equity-linked understanding in Middle East with a disastrous produce since May 2011 whenTaiwan's United Microelectronics Corp sole $ 500 million of automobile holds with a produce of -0.25% as great as a 39% acclimatisation prem! ium. However, which understanding was related to a brand brand brand new Taiwan dollar, although it was staid in US dollars. Looking during dollar-denominated transactions, there hasn't been any issues with a disastrous produce since 2009.
The Khazanah holds traded up to about 101 in a grey marketplace during a two-and-a-half-hour bookbuilding, which boosted investor confidence in a understanding even further.
The buyers enclosed a mix of investors, including normal CB hedge supports as great as undisguised investors, though additionally a lot of cross-over accounts, some credit accounts as great as some true equity accounts, a single source said. The direct from Islamic investors was reduce than upon Khazanah's previous equivalent sukuk, however, which might partly be due to a actuality which they take longer to have in! vestment decisions. Following a genuine estate crisis in a Gulf segment there have been additionally fewer investors seeking during item classes outward of true bonds, a single spectator said.
The source estimated a Islamic, or Middle Eastern, direct during about 20% of a total, with Middle East accounting for about 50% as great as Europe a superfluous 30%. Khazanah's ultimate dual Islamic exchangeables a 2008 understanding in to Parkson anda 2007 understanding in to Malaysia-listed Plus Expressways got about 50% of direct from a Middle East
The ultimate holds were marketed ! during a cre dit spread of 150bp, a dividend produce of 2% as great as a batch steal cost of 50bp. Sources remarkable which there is plenty of steal available in a market, though in box it becomes some-more formidable to access later on, a bookrunners will yield steal by a batch lending agreement with Khazanah.
At a final terms, this translated in to a 92.8% down remuneration floor as great as an pragmatic sensitivity of about 27%, which compares with a ancestral vol of about 35%.
The understanding came after dual Hong Kong-listed companies tapped a automobile down remuneration marketplace for a combined $ 434 million upon Tuesday, respirating brand brand brand new life in to a marketplace which had seen usually 3 deals so far this year. The dual issuers 361 DegreesandChina Overseas Grand Oceans Group offering dual very opposite deals in a sense which a single of them was noticed as utterly costly (361 Degrees) whilst a other a single was very cheap. Both saw great demand, however, su! ggesting which investors have been happy to make use of a CB marketplace as a less unsure approach to gain bearing to Asian equities as a regional markets continue to redeem from last year's slump.
Earlier in a year, CB investors were very discreet about deals which were not hedgeable as great as pronounced they would cite to see some-more paper from high-grade issuers. Khazanah seems to have listened, as great as a decision to monetise a superfluous shares in Parkson a year ahead of a majority of a initial equivalent has clearly paid off if a holds aren't exchanged in to equity, a association is even getting paid to take investors' money for during slightest 3 years.
Khazanah invested $ 69 million in to Parkson during a time of a Hong Kong IPO in Nov 2005and when a Malaysian investment association issued a initial equivalent in to a batch it owned about 9.8% of a company. The 2008 equivalent was sole concurrently with a $ 96.8 million placement, which marked down Khazanah's overall interest as great as left 220 million shares (adjusted for a five-for-one batch split) to behind up a $ 550 million exchangeable.
About 45% of which initial down remuneration was put behind in Mar 2011, withdrawal about 110 million shares still scored equally up in which exchangeable. The understanding is equivalent in to equity during a cost of HK$ 19.45 per share, as great as given which a batch is now trading during about half which cost it is doubtful which it will ever be converted. However, if a share cost were to recover, Khazanah has a choice to solve a sell of both holds in cash, definition there is no risk which it will get caug! ht out w ith too couple of shares t! o delive r to investors upon possibly deal.
The equivalent was jointly organised byCIMB,Deutsche BankandJ.P. Morgan.
Posted bySalvatore_Dali
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