Asia Briefing 2017 Power sector dominates in Asia in 2017 Japanese agencies and banks lead the way Deal flow strong in Indonesia, Vietnam, and Bangladesh
THIS REPORT Alfonso Olivas Data and art editor alfonso.olivas@txfmedia.com Jonathan Bell Editor-in-chief jonathan.bell@txfmedia.com Oliver O'Connell Contributing editor oliver.oconnell@txfmedia.com TXF Asia 2017 Conference Producer Judith Fagelson Judith.Fagelson@txfmedia.com Business Development Alexandra Shatova Alexandra.Shatova@txfmedia.com Welcome to TXF's Asia Briefing 2017. This is designed to serve as a backdrop to, and basis for discussion at, the TXF Asia 2017 Export, Agency & Project Finance conference. This briefing provides you with the headline figures for ECA-backed financing activity in Asia over 2015, 2016, and 2017 year-to-date. It is designed to show you the countries and sectors that have produced the most financing activity. It also shows the most active banks, ECAs, and borrowers. All of the data referenced in this briefing comes from the extensive database generated at tagmydeals the innovative free online social platform where financial professionals can register their achievements in assembling complex deals in trade, export, commodity and project finance, and connect with peers and clients in these spaces. Register for free today! To meet face to face with regional leaders in these industries, register for TXF Asia 2017 today or contact Alexandra Shatova. Contents 1. Market overview Both volumes and the deal flow have been creeping down in Asia since peaking in Q2 2016, but predominantly state-owned borrowers in Indonesia and Vietnam continue to provide a solid pipeline of deals. Deal flow has dropped significantly in China. 4 2. Sector breakdown Power easily outstripped all other sectors in both 2016 and 2017, as major infrastructure investment programs have required significant amounts of export credit-backed debt. Transport, and Metals & Mining, once major export finance market drivers in Asia, have significantly dried up. 5 3. The Asia rankings Japanese and Korean agencies continue to dominate regional activity, but European ECAs are having a good year in 2017. Japanese banks take the top three lender spots. Mailing address: Canterbury Court 1-3 Brixton Road London, SW9 6DE Tel: +44 (0) 20 3735 5180 Registered office: TXF Limited 7-10 Chandos Street London W1G 9DQ Countries included in this analysis Afghanistan, Bangladesh, Bhutan, Brunei Darussalam, Cambodia, China, Fiji, Hong Kong, India, Indonesia, Japan, Korea, Korea (North), Laos, Malaysia, Maldives, Marshall Islands, Mongolia, Myanmar, Nauru, Nepal, Pakistan, Papua New Guinea, Philippines, Samoa, Seychelles, Singapore, Solomon Islands, Sri Lanka, Taiwan, Thailand, Timor-Leste, Tonga, Vanuatu, Vietnam 6 Registered in England & Wales. Registered No: 08421624 TXF Limited 2017 Copying without permission of the publisher is prohibited. TXF Limited TXF makes no representation regarding the completeness, accuracy, or timeliness of any information and data provided or that such information and data will be error-free. TXF assumes no responsibility for the consequences of use of the information. In no event shall TXF be liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information. Users are encouraged to visit and review individual deal data on www.tagmydeals.com and contribute to the completeness and accuracy of our deal coverage. 3
Market Overview Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Both volumes and the number of deals have been creeping down in Asia since peaking in Q2 2016. Indeed, the first two quarters of 2017 equaled just over half the dollar value and deal number of the same period last year. 24 $9.13bn 16 $7.74bn 22 17 $4.83bn $5.78bn 16 10 Indonesia dominates the region in terms of deal flow and volumes, with 39 deals since the start of 2015, and accounting for 43% of volumes in the top ten most active markets. This is predominantly due to a big push by energy company PT PLN (Persero) to modernize electricity generation and distribution across the country. This investment program is set to continue for the second half of 2017. $2.05bn $1.18bn Mongolia and Vietnam have held steady since 2015 and continue to tap the export finance market with some regularity. Despite sheer market size, deal flow has come off significantly in China to date in 2017, with just one deal closed this year. Top countries Top countries in Asia 2015 2016 2017 Total Vol ($m) No of deals Vol ($m) No of deals Vol ($m) No of deals Vol ($m) No of deals 1 Indonesia 847 11 9,260 18 4,921 10 15,028 39 2 Vietnam 1,587 6 1,409 5 814 3 3,810 14 3 Hong Kong 607 5 101 2 411 3 1,119 10 4 Singapore 2,040 11 411 2 290 1 2,741 14 5 Marshall Islands - - 748 4 227 1 975 5 6 Australia 77 2 623 3 100 1 800 6 7 Philippines - - 56 3 83 1 138 4 8 Bangladesh 155 2 2,472 6 61 3 2,689 11 9 Sri Lanka 74 1 189 3 44 1 308 5 10 China 2,336 20 4,932 14 7 1 7,275 35 11 Mongolia 4,427 3 1,004 3 6 1 5,437 7 4
Sector breakdown Power easily outstripped all other sectors in both 2016 and 2017, as major infrastructure investment programs have required significant amounts of export credit-backed debt to fund both construction and equipment purchases. Volumes for 2017 look set to equal or top those of 2016. The largest deal to close in 2017 was the $3.36 billion NEXI-backed financing of the Tanjung Jati B 5&6 project for Indonesia's PT PLN (Persero), that also included significant direct lending from JBIC. Coal-fired plants dominate the sector in Indonesia and Vietnam, with some geothermal and combined cycle projects. Combined cycle power deals have also been closed in Bangladesh. Transport and Metals & Mining, once major export finance market drivers in Asia, significantly dried up in 2016 and 2017. The dip in transport deals can be accounted for by the (hopefully, temporary) end of export credit support for Boeing and Airbus, forcing airlines to seek alternative financing sources outside of the export finance market. In shipping, there has been a collapse in the number of orders outside of the European and North American cruise ship market. Of the shipping deals closed in H1 2017 in Asia, most were for non-asian borrowers financing vessels flagged in Hong Kong or the Marshall Islands. The Telecoms and Petrochemicals sectors did not feature in the first half 2017, but the manufacturing sector saw notable deals for LG Display in Vietnam, and Viyellatex in Bangladesh. Sectors Power Transport Oil & Gas Metals & Mining Telecoms Other Manufacturing Infrastructure Petrochemicals Capital Equipment Agri/soft Commodities 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2015 2016 2017 5
The Asia rankings Japan Bank for International Cooperation continues to dominate as the most active export credit agency in Asia, following a stellar 2016. To date in 2017, both JBIC and NEXI have each supported double the volumes of business than third place KSURE, mostly due to their involvement in the Tanjung Jati B 5&6 project, and more general support for the power sector. Sinosure and KSURE have a more diverse portfolio of deals in 2017 across the manufacturing, power and transport sectors. KSURE in particular is having a strong year, having already surpassed last year's total support for the region. European ECAs have had a good start to the year, either already approaching their figures for 2016 (Euler Hermes), or topping them in just six months (UKEF, GIEK, Finnvera). Japanese banks have mirrored their national agencies and have taken first, second, and third place as the top lenders in Asia so far this year. Credit Agricole and HSBC look set to provide more debt to the region than in 2016, and ABN AMRO continues to grow its regional business year-on-year. ECAs Top ECAs in Asia in 2017 2015 2016 2017 1 JBIC 1,244 5,409 2,193 2 NEXI 557 326 2,081 3 KSURE 1,302 962 1,070 4 Sinosure 866 430 299 5 Euler Hermes 1,396 286 254 6 UKEF 776 4 170 7 KEXIM 316 1,806 131 8 Finnvera 47 95 100 9 GIEK 117 29 90 10 Bpifrance - - 83 Lenders Top Lenders in Asia in 2017 2015 2016 2017 1 MUFG 739 655 615 2 Mizuho 165 444 526 3 SMBC 722 834 520 4 Credit Agricole 227 470 410 5 HSBC 1,325 390 366 6 ABN AMRO 33 139 256 =7 Mitsubishi UFJ 118 152 240 =7 Norinchukin Bank - 152 240 =7 OCBC - 365 240 =7 SMTB 168 202 240 6
Top borrowers 2015-2017 Vol $m No of deals 1 PT PLN (Persero) 4,950 8 2 Turquoise Hill 4,400 1 3 Tangguh LNG 3,745 1 4 PT Bhimasena Power 3,421 1 5 Hikvision 3,000 1 6 Reliance Industries 2,208 5 7 Dhaka Power 1,650 1 8 Taiyuan Heavy Industry 1,490 1 9 Vietnam Oil 1,200 1 10 Vietnam Electricity 1,167 4 11 Korean Airlines 1,038 7 12 Government of Mongolia 1,009 4 13 Government of Nepal 750 1 14 Reliance Jio Infocomm 750 1 15 Bangladesh Power 724 3 16 Vietnam Airlines 703 3 17 Mitsubishi Corporation 601 1 18 MOF Indonesia 580 8 19 FOS Tankers 528 1 20 BW LPG 511 2 200 400 600 7
Get in touch! For more information on TXF Asia 2017: https://www.txfnews.com/events/event/76/txf-asia-2017 For speaking opportunities: Judith Fagelson judith.fagelson@txfmedia.com For commercial opportunities: Alexandra Shatova alexandra.shatova@txfmedia.com