S’PORE IMPORTANCE WANING?

At least 37 China firms skip city-state in their marketing roadshows this year

IT’S been a banner year for Asia’s dollar-bond market, with an unprecedented pace of sales and dozens of debut issuers. But in Singapore, one of the region’s main financial hubs, there’s a note of gloom among its fund managers.

The city is starting to get left out in the cold when it comes to marketing offshore dollar debt, in another sign of the increasing influence of China. At least 37 Chinese companies skipped roadshows in Singapore this year, out of the 136 that conducted investor meetings in Hong Kong, according to data compiled by Bloomberg. That’s a shift from the norm that prevailed over the past decade.

“It’s not an encouraging sign for me,” said Leong Wai Hoong, a senior portfolio manager for Asian fixed income at Nikko Asset Management in Singapore.

Leong said the change reflects the increasing buying power of Chinese funds, which are taking a bigger share of the buyer base in the region in the same way that China’s issuers are doing in the Asian dollar-bond market outside Japan.

With rising liquidity in dollars, Chinese banks and asset managers are able to take up issuance without borrowers needing to drum up foreigners’ money. That’s led to concerns over a concentrated investor base for some US$475 billion (RM1.95 trillion) in Chinese notes outstanding.

For Singapore-based investors, it makes it harder to sit down with the debt issuers.

Some of those skipping Singapore this year: Junk-rated logistics service provider China Logistics Property Holdings Co, which only met investors in Hong Kong for its debut sale, said a person familiar with the matter in July. Unrated steel and chemical maker Liaoning Fangda Group Industrial Co planned to only meet investors in Hong Kong on November 21 while having a call with those in Singapore, said sources.

“While it is a current trend, we do not think it will be long lasting,” said Leong Wai Mei, a money manager at Eastspring Investments here. “As Chinese firms mature, they will want bonds to be widely distributed,” she said.

For his part, Geoffrey Zhao, head of debt capital markets for greater China at Citic CLSA Securities in Hong Kong, says his team still generally encourages debut issuers, particularly highyield ones, to visit Singapore as part of their roadshows. And most are still making the effort to swing by the city state.

The trend is shifting at a time when sales are picking up. Chinese companies have sold a record US$169.4 billion of dollar bonds this year, accounting for 61 per cent of greenback notes issuance in Asia excluding Japan.

Singapore-based investors still have it better than United Statesbased ones. The amount of Chinese dollar bonds that can be issued to American investors — socalled 144A deals — has plunged to nine per cent this year, from 67 per cent six years ago.

For issuers, forgoing trips to the US and Singapore means getting deals done faster. It’s just another sign of China’s rising clout, with its banks now holding more than US$800 billion in foreign exchange.

“A lot of Chinese issuers are looking to cut their roadshow period shorter in order to get deals done faster,” said Raymond Chia, Singapore-based head of credit research for Asia ex-Japan at Schroder Investment Management Ltd. “Over the longer term, this could be sacrificing getting more investors to understand the company better.” Bloomberg