Beginning with a general definition of high-yield bond products and where they reside within the corporate capital structure, this newly updated guide looks at the development of high-yield bonds in the United States and Europe before analysing this sector in Asia. It covers issuer countries and industries, ratings, and size distributions, and also covers the diversification of the high-yield issuer universe. It includes a thorough technical analysis of high-yield bond structures commonly employed in Asian transactions, including discussion of the respective covenants and security packages that vary widely across the region. Chapters and sections new to this edition cover such subjects as high-yield bond restructuring, the new high-yield "Dim Sum" market, and the high-yield placement market shutdown of 2008 – 2009. Finally, the book looks at the new characteristics of Asian economies for indicators on how the high-yield market will develop there are the near future.

• Offers an extremely detailed analysis of Asia's high-yield bond market
• Features new and updated material, including new coverage of the key differences between Asian structures and United States structures
• Ideal for CFOs of companies contemplating high-yield issuance, as well as investment bankers, bank credit analysts, portfolio managers, and institutional investors

FLORIAN H. A. SCHMIDT is Managing Director and Head of Debt Capital Markets, Asia, with ING Wholesale Banking, based in Singapore. He has been professionally involved in Asia's debt capital markets for more than twenty years. During that period, he has originated and executed a large number of bond issues across Asia, including several landmark high yield bond offerings. Among these was the Mongolian Mining Corp.'s U.S.$600MM benchmark, the largest ever private sector bond from Mongolia and the first 144a issue from the country (named "Best High Yield Bond 2012" by Asiamoney); Access' US$420MM senior notes, due 2018 "Japan Deal of the Year and Most Innovative Deal 2011" by FinanceAsia; Indika Inti Energi's debut US$250MM senior notes due 2012, (named "Best High Yield Bond 2007" by FinanceAsia); and China Oriental's inaugural US$550MM senior notes, due 2017. Mr. Schmidt was also involved in some prominent Asian high yield bond restructurings, including Davomas and Titan Petrochemicals.

Preface

Acknowledgments

Chapter 1: Why High Yield’s Time Has Come in Asia

1.1 The Asian Pulp & Paper (APP) Legacy

1.2 Necessary Corporate Developments Benefiting Asian High Yield

1.3. Necessary Macro Developments Benefiting Asian High Yield

1.4 Asia’s Corporate Landscape of Family Enterprises

1.5 Traditional Generic Business Strategies for Family Enterprises

1.6 A Theoretical Approach to Debt Versus Equity Funding

1.7 The Factor “Growth” Makes All the Difference

1.8 An Asian Growth Market: China’s Real Estate Sector

1.9 Suitability of High Yield Bonds for Family Enterprises

1.10 A “Wall” of Liquidity

Notes

Chapter 2: An Overview of the High Yield Bond Market

2.1 The Genesis

2.2 The World’s Largest High Yield Bond Market

2.3 Europe’s Growing High Yield Bond Market

2.4 “True” High Yield Arrives in Asia

2.5 The Asian high yield renaissance

2.6 Through and beyond the Subprime Crisis

2.7 The Asian high yield market comes of age

2.8 More tests of resilience

2.10 Outlook - Disintermediation of bank lending

Notes

Chapter 3: Asian High Yield Issuers

3.1 What’s in a name?

3.2 The technology, media and telecoms sector

3.3 The PRC real estate sector

3.4 The metals and mining sector

3.5 Highly concentrated new issue universe

3.6 Issuer interviews

Notes

Chapter 4:

The Secondary Market for Asian High Yield

4.1 The age of liquidity

4.2 The new fast money reality in Asia

4.3 “Real Money” institutional investors

4.4 The regional private wealth management bid

4.5 Regulation S versus 144A

4.6 Why going down the credit curve?

4.7 Investors’ approach towards high yield

4.8 Limitations of acceptance

4.9 Trading Asian high yield

4.10 Investors in the future, for the future²⁰

Notes

Chapter 5: Structuring and Transacting High Yield Bonds

5.1 Changes in the corporate capital structure

5.2 Structuring high yield bonds

5.3 Disclosure for high yield bonds

5.4 Marketing, pricing and distributing high yield bonds

5.5 Credit ratings and the ratings advisory process

Notes

Chapter 6: Asian High Yield Bond Covenants Offer Superior Investor Protection*

Jeannie-Marie Noyce

Alexander Dill

Laura Acres

6.1 Key concepts in assessing covenant structures

6.2 Structural protections against key risks follow a common pattern globally

6.3 The Standard Asian High Yield Structure

Note

Chapter 7: Workout and Recovery - High Yield Bonds in Distress

7.1 Corporate governance issues in China

7.2 The Asia Aluminum case

7.3 Lessons from the Asia Aluminum Case

7.4 Capital structure and the lender – noteholder relationship

7.5 The meaning of structural subordination

7.6 Distressed exchange for Titan Petrochemicals

7.7 The Red Dragon / Central Proteinaprima case

7.8 The Davomas case

7.10 Conclusion

Notes

Chapter 8: The Rise and Fall of the Asian High Yield Private Placement Market

8.1 Key market characteristics

8.2 Private placement structures

8.3 Supply side attractions

8.4 The private placement issuance process

8.5 Investors’ motivations

8.6 The collapse of Asia’s high yield private placement market

8.7 The missing piece in Asia’s credit culture?

Notes

Chapter 9: High Yield Funding in Renminbi

9.1 An Asian currency corporate bond market – at last?

9.2 The anatomy of the CNH market

9.3 What are the benefits of “Dim Sum” Bonds?

9.4 Cumbersome repatriation process

9.5 Covenants offer less protection than US-style high yield

9.6 Synthetic renminbi bonds

Notes

About the Author and Contributor

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