In one of the most dismal years on record for debt market practitioners in Asia, JP Morgan has been able to re-asset some of the pre-crisis dominance that once saw it at the forefront of issuance for many of the region's semi-sovereign and blue chip corporate borrowers. In a year that has produced only 18 major international public deals, the bank has been able draw on a combination of innovation, luck and foresight to lead three of the most important transactions of the year.
It is particularly well entrenched in Singapore where, alongside archrival Morgan Stanley Dean Witter, it had the acumen to see that the Lion City was about to emerge from the shadows and become one of the most active and important issuance bases in the region. The bank was the sole lead manager of a $300 million debut bond for Singapore Power in late April, which marked the first real benchmark by a wholly Singapore government-owned issuer. The deal may have been small by international standards and it may have been predominantly placed in its home market, but it represented an important new milestone for the region's capital markets. Keeping the issue size down was also a clever strategy, which in combination with the five-year deal's rarity value, ensured tight pricing at 94bp over Treasuries, or 5bp over Libor.
Singapore Power's success paved the way for a second deal, this time by the Port Authority of Singapore (PSA) and in association with Morgan Stanley. Viewed by PSA as an important first step to re-balancing its capital structure ahead of listing, the deal provided the international markets with a much larger benchmark and one that significantly broadened the City State's maturity and investor profile. Indeed, distribution figures show that about 42% of paper went to the US.
Subordinated debt has been a recurring constituent of JP Morgan's skill-set. DCM head Marc Jones and his financial institutions expert Mark Follett have spent much of the year talking to regulators, particularly in Thailand and Korea, in a bid to establish functioning bank capital guidelines. They have been particularly successful in Korea, where Hanvit Bank's unprecedented $850 million upper and lower tier 2 debt issue managed to keep the bank alive until autumn. JP Morgan bankers themselves have, so far, also survived largely unscathed from the merger with Chase and Jardine Fleming. Many in the market are now watching with some trepidation to see how the three will fare in combination next year.