SGD New Issue Review : Grand China Air (Guaranteed by Hainan Airlines)
GRAND CHINA AIR (HK) GUARANTEED SGD 3Y
_ New Grand China Air (HK) SGD 3Y announced post roadshow. Deal is anchored
– Guarantors: Hainan Airlines Co.,Ltd.and Grand China Air Co., Ltd.
– Initial price guidance: 6.25% area
– Issue size: TBC
– Timing: As early as today
Comparable Bonds :
Hainan Airlines 6.25% 2017 CNH – 99.75, 6.35% which swaps to 4.50% in SGD (indicative)
Singapore Airline 3.22% 2020 SGD – 2.82% indicative yield
Grand China Air is managed under a parent company called Grand China Airlines Holding Company (GCAHC) which is held jointly by Hainan province government (48.6%), George Soros (18.6%), and the HNA group (32.8%). http://en.wikipedia.org/wiki/Grand_China_Air
Grand China Airlines Holding Company owns 29.06% of Hainan Airlines, a listed company in Shanghai Composite which is their cashcow although their revenue is growing alot more than their operating income, and in this case, it is more important to look at the guarantor than the issuer.
Then we have this.
“NEW DELHI, Oct. 11, 2014 /CNW/ — The World Travel Awards (WTA) Reception Ceremony for 2014 was held at the Oberoi Hotel in New Delhi India on the evening of October 10th, with Hainan Airlines Co., Ltd receiving high recognition by industry judges and passengers and awarded with “Asia’s Leading Airline Business Class” at the event. ” http://www.newswire.ca/en/story/1426748/hainan-airlines-honored-as-asia-s-leading-airline-business-class-by-wta-2014
My thoughts :
Hainan Government + George Soros > = Temasek or GIC ?
The gist is this – Grand China will takeover all the 4 airlines under the HNA Group and they have a fleet of 133 planes !!! (SIA has only 105 planes !)
“According to the plan, the former four airlines under HNA group, Hainan Airlines, Shanxi Airlines, Chang’an Airlines, and China Xinhua Airlines should be transferred into Grand China Air in the near future.” http://en.wikipedia.org/wiki/Hainan_Airlines
Hainan Air has been on an issuing spree this year in CNY space issuing a total of CNY 6.17 bio in bonds.
Hainan Airlines 7.4% 09/2017 CNY 1.2 bio
Hainan Airlines 7.2% 08/2017 CNY 1.17 bio
Hainan Airlines HK Co 6.25% 05/2017 CNH 3 bio (currently indicating 6.29%)
Hainan Airlines 8% 05/2019 CNY 400 mio
Singapore is a natural choice for companies running a bit tight at home eg. Vanke and Far East Horizon.
Chinese Tap Singapore Wealthy in Record Bond Sales: Asean Credit
“Singapore’s bond market is getting a boost from Chinese borrowers tapping the island’s millionaires for record amounts at rates almost 30 percent cheaper than home.
Private investors in Singapore took almost all of the S$380 million ($299 million) of local dollar-denominated notes sold by mainland Chinese companies excluding banks last month, according to people familiar with the matter. Offerings in the currency by all Chinese borrowers rose to S$1.7 billion this year, almost double such sales for the whole of 2013, according to data compiled by Bloomberg.” http://www.bloomberg.com/news/2014-10-02/chinese-tap-singapore-wealthy-in-record-bond-sales-asean-credit.html
Yes. I know the climate is not good for airlines right now with stock prices suffering on Ebola fears.
But the 4th largest airline in a country of 1.3 bio ? partly government owned as well ? And paying you 6.25% ?
Good bye Far East Horizon !
GRAND CHINA AIR (HK) SGD 3Y
BOOK IS IN EXCESS OF S$450MM
Hainan – books building crossed $600m at 4pm close
Tata – just $350m at 3pm close
Tata started late today and closed earlier
GRAND CHINA AIR (HK) SGD 3Y
– Book is in excess of S$750MM
– Final price guidance: 6% (the number)
– Expected issue size: S$200mm with some room to grow
– Timing: Book subject, today’s business
Let’s guess TH,
which do you think will command a higher price after issued?
You have a nice day
Hainan probably… hearing some banks offering 70% leverage..
Tata is less.
Well said, TH.
An interesting day for a lacklustre October. Good night.
Final Issue Size SGD 250 mio = CNY 1.2 bio
Market open 100.05/100.25
Just call DBS..
they offered me the bonds at 100.9 asking..
really peeves me there is way retail investors can see OTC prices easily online… and have to depend on their quote(which means they marked up for their comms?)
There are different levels of client tiers.
If you are savvy client ie. have 3-5 private banking accounts, then the mark up is standard 0.2 cts (or less depending on your relationship).
If you are solely dependent on them, then I suggest that SGD bonds are not for you because that price is an outright RIP OFF. Try USD stuff, that is a market you can trust.
And don’t bother complaining about them.. you know who runs the place. ..
Ya.. i have 3 pte banking accounts..
but I think I am the peasant level. 🙂
Bargain ! Threaten ! Scream ! Cry !
GRAND CHINA AIR (HK) SGD 3Y – STATS**
Book in excess of S$700mm, 45 accounts
By Investor Type:
Private Banks 97%
Fund Managers/ Banks 3%
Hi all, I just want to share that I came to realize that this bond is not CDP registered.
For the first time, I am holding a SGX-listed SGD bond with a bank custodian account. Incurred some small money charges (negligible) for custodian fees with my bank.
I heard it is a little more common for SGX USD bonds. Still learning and experiencing something new in bonds everyday.
Yes, I’ve been charged on Grand China Air too.
The biggest surprise was that GLP has the same charges.
I wonder, why do these bonds not want to be CDP-registered?
LOL, reminds me of the old scripts-trading days.
Because the non Singaporean buyers would have to pay custodian fees as they do not have CDP accounts !
Pardon my ignorance 🙂