Hong Kong bankers get welcome lift from convertible bond frenzy
- A clutch of global banks in Hong Kong help a trio of Chinese tech heavyweights raise a combined US$9 billion via convertible bond sales, bringing in some much-needed fees
- Bankers expect the rush to continue and extend through the Asia Pacific region as convertible bonds help drive down interest costs
When one door closes, another one sometimes opens. For bankers in Hong Kong, where big mergers and acquisitions and initial public offerings have largely stalled, convertible bond issues are very much in vogue.
Major players — Bank of America, Barclays, Citigroup, Goldman Sachs, HSBC, JPMorgan Chase and Morgan Stanley — have been busy helping a trio of Chinese tech heavyweights raise a combined US$9 billion through convertible bond sales, bringing in some much-needed fees.
JD.com kicked things off with a US$2 billion offering last week, a figure matched by Lenovo Group, which just announced it would sell zero-coupon convertible bonds to a unit of Saudi Arabia’s sovereign wealth fund. Step aside for Alibaba Group, which broke records with a US$5 billion issue too.
Bankers expect the rush to continue and extend through the Asia Pacific region.
“The resurgence in convertible bond sales is encouraging for bankers after a slow 2023,” said Avinash Thakur, head of APAC capital markets financing at Barclays in Hong Kong. “While the fee wallet for convertibles may not be as big as for IPOs, it definitely helps.”
“It’s encouraging,” he said, noting that convertible bonds enable companies to use a different source of financing while driving down interest costs. “We’re poised to see more capital markets activity over the coming months.”
