Jumbo Ping An Opens Chinese Domestic CB Market for 2019

17 January 2019

Issue size > US$ 3.8 billion

The burgeoning Chinese Domestic Convertibles market has reopened for 2019 with a jumbo CNY 26 billion ($3.84 billion) deal for Ping An Bank, one of the largest CBs we've seen in recent years. The deal sticks to the established market template of a 6-year term with an annual step-up coupon, although we note that the coupons step up somewhat more than average, resulting in a final coupon of 4.0%. As is also typical, the bond accretes with a maturity redemption at 106 (excluding the final 4% coupon). The conversion price has been set at CNY 11.77, a 14.8% premium to today’s close of 10.25.

The bond is soft-callable throughout the conversion period (which commences in July 2019) with a 120% trigger, which is lower than the more widely used 130%. The bond also has the typical discretionary reset feature, whereby the board can choose (with shareholder approval) to reset the conversion price downward if the stock price falls below 80% of the prevailing conversion price for 15 consecutive trading days. The bond has full dividend protection via ratio adjustment.

CICC, CITIC, Guotai Junan Sec, Goldman Sachs Goa Hua, BOCI and Ping An Securities are lead managers on the deal.

This bond is available to download, for subscribers of the Monis Data Service (MDS), as are the other instruments that form the entire Chinese Domestic Convertible market (>=$100mm issue size).

Philip Kramer, CFA
+44 20 8081 3775
Tatyana Hube, CFA
+1 646 445 8334
Will Weichhart
+44 20 8081 2078
Monis Data
+44 20 8081 2700

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