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DEALSOFTHEYEAR
bond market offered the only recourse for some corporates. existing banks into the issue as possible, while extending the tenor
San Miguel Brewery was one. The company is based in the by a further two years. They also tapped the banks for an additional
Philippines, a country whose local bond market has traditionally US$645.2 million one-year tranche.
lacked depth when it comes to corporate bonds. In the end, the combination of issuer and structure factors
The company substantially changed that perception when it suc- offered such an appealing mix that 40 new banks joined the facility,
cessfully issued by far the biggest domestic corporate bond ever. greatly expanding Noble’s banking group and ensuring that the loan
The deal was a result of restructuring by the San Miguel parent had the largest syndicate group for any Asian loan in the past
conglomerate. As part of its strategy of converting into a heavy decade.
industrials holding company it has been gradually selling its food The huge array of lenders meant that the original US$1.8 billion
and beverage assets, of which San Miguel Beverage is one. deal ended up being oversubscribed to US$2.5 billion. That allowed
To make the unit more appealing, San Miguel Brewery needed Noble to raise the size to the final US$2.4 billion.
to buy various beer brands owned at the holding company level. The resounding response from new banks ensured that Noble
And with the international markets in turmoil in early 2009, San ended up raising the largest US dollar denominated syndicated loan
Miguel Brewery opted to look local for the funding. from an Asian corporate during 2009.
The four bookrunners went about pulling in virtually every sin- It also managed to issue an US$850 million, 10-year investment
gle major bank and insurance company in the country into the grade bond just six days after this loan closed, in effect raising
deal’s marketing process to close on the maximum size. US$3.25 billion. Not bad for a month’s work.
Led in the main by Development Bank of the Philippines and
HSBC, the auction period of the bond took about three weeks, a fit-
ting length of time for the largest corporate deal that the country BESTLEVERAGEDFINANCING
had seen by a country mile. OrientalBreweryUS$912million-equivalentacquisitionfinancing
In the end, decent demand ensured that the three-, five- and 10- Bookrunners:Calyon;HanaBank;HSBC;ING;J.P.Morgan;Korea
year tranches each paid the equivalent of 250bp over government DevelopmentBank;Natixis;Nomura;StandardChartered
bonds, at the tight end of pricing talk that had been as wide as
325bp over.
Ultimately the success of the transaction highlights the fact that If you had asked many banks whether they would be willing to sup-
Philippines’ investors are gradually gaining an appetite for debt port a private equity company with a leveraged buy-out during most
that is not intrinsically government-linked. For the country’s debt of 2009, they would have laughed in your face.
market that can only be a good thing. So it is to the credit of Kohlberg Kravis & Roberts (KKR) that it
Other notable deals during the year included the slew of huge managed to raise a US$912 million multi-currency leveraged facility
renminbi bonds, including a Rmb40 billion subordinated issue for in July to support its first acquisition in Korea, a US$1.8 billion buy-
Industrial & Commercial Bank of China, although the fact that only out of Oriental Brewery.
local investors could buy them somewhat limited their appeal. The transaction was not just the first but also the largest lever-
aged loan in Asia over the past two years. It was a notable result
amid market conditions that remained far from normal, and was
BESTSYNDICATEDLOAN only achievable because of the willingness of banks to underwrite
NobleGroupUS$2.4billionthreetrancherevolvingloanfacility the deal.
Bookrunners:AgriculturalBankofChina;ChinaDevelopment HSBC, J.P. Morgan, Nomura and Standard Chartered each
Bank;Commerzbank;DBS;HSBC;ING;J.P.Morgan;MUFG;RBS; underwrote US$150 million of the loan, while Calyon, ING, Natixis
SG;StandardChartered and WestLB participated on a take-and-hold basis.
The loan was structured to combine four tranches of various
Korean won loans plus two US dollar floating rate note tranches, all
When a relatively straightforward syndicated loan attracts 63 of which have a five-year tenor.
lenders from across the globe, it’s obviously an unusual transac- By breaking the deal into several tranches, the bookrunners max-
tion. imised the liquidity available in the market, a smart move given the
That’s what Noble Group, the Hong Kong-headquartered com- skittishness that many banks must have felt about participating in a
modity trading company, managed with its three-tranche bond, leveraged financing.
which closed on October 16 and was signed on October 28. Eventually 16 banks ended up in the finance group, either as
The deal attracted such strong interest because of a few factors. underwriters or syndicate participants.
For a start, Noble’s background means it has multiple trade finance Banco Santander originally committed to support the deal with a
counterparties across the world. That made getting a very broad US$65 million tranche, but the level of support from regular under-
array of lenders a little less difficult than it might have been for writing commitments meant that it was scaled back to nothing, a
purely regional companies. strong indication of the level of support for the final facility.
Even more importantly, Noble chief executive Richard Elman For KKR it was a strong assertion of the banks’ faith in its ability
had just inextricably tied the company to China, when he sold a to manage a new asset. It also acted as a notice that for the right
20% stake to China Investment Corp. for US$850 million in late buyer and the right target, financing remains available even in diffi-
September. cult market conditions.
Throw into that mix a ratings upgrade from Moody’s in late
October to make the company a full investment grade credit, and Asiamoney did not include the Best regional securitisation or Best
Noble’s story was particularly appealing. regional project financing awards this year due to a dearth of entries in
The loan included an existing US$1.2 billion revolving facility, these categories.
which the bookrunners took advantage of to get as many of the
40 DEC2009/JAN2010 ASIAMONEY
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