UBS favors China, Phl debt markets

MANILA, Philippines - UBS Investment Bank is poised to take advantage of the active debt markets of China, the Philippines and the rest of Southeast Asia.

UBS head of Asia debt capital markets Guy Wylie said that China, the Philippines and the Indonesia will have a busy second semester in terms of debt or bond issues.

“We have a healthy Philippines pipeline for the next three months and we think it will be a major issuer during difficult markets,” Wylie said in an interview with FinanceAsia, one of the prestigious business publications in the region.

Last week, Finance Secretary Cesar V. Purisima said that the Philippines would be returning to the global debt market to reduce its foreign currency loans while taking advantage of the confidence of the investor market.

Initial figures are $4 billion to $4.5 billion.

In April this year, the Philippines borrowed $1.5 billion by floating a dollar-denominated bond, with a maturity date of 2037.

The Philippines issued its first global peso bonds in September 2010, the first Asian country to sell local currency debt in the global market. It sold $1 billion in 10-year global peso bonds in September 2010 and $1.25 billion in January 2011.

Meanwhile, Wylie said that UBS is in place to meet debt activity from Southeast Asia, especially Indonesia, where it managed first-time issuer Alam Sutera.

He told FinanceAsia that they expect continued issuance from the Indonesian high yield market as investors like these credits, given they have tangible asset backing, such as coal deposits or oil and gas fields.

UBS’s debt business comprises bond origination, strategic loans and derivatives, including finding alternative markets to straight US dollars.

If we go through a volatile second half in 2012, as we did last year, you will see a need for debt raisings in different products using different currencies.

An example is that UBS was the first to arrange a Swiss franc bond for a high-rated borrower in Asia, and it has a few Swiss franc deals now in its pipeline.

“If the market gets nervous globally, currencies like the Swiss franc and Sing dollars become safe havens and issuance remains open in these markets,” he added.

But its potential flagship in Asia would be China.

“Our China franchise is really important to us. We are one of the few international banks with a license in China. We’ve done a few significant China debt deals such as Sinopec and Yanzhou Coal, and we are just as proud of China Minsheng Bank’s Rmb20 billion onshore bond,” the UBS executive said.

Wylie said that the China market is vital whether it is an onshore bond or offshore loan or if it is in dollars or renminbi (dim sum).

“That is what we are always thinking about. There is less demand for capital in China so it is not a loss-making business. We have got long-standing relationships in China through our advisory and IPOs (initital public offering) business and we utilize it. That is part of our strategy,” he added.

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