AB INBev’s acquisition of SABMiller close to winning Chinese approval

According to sources, Anheuser-Busch InBev NV’s $107bn acquisition of rival SABMiller Plc was nearing regulatory approval from China’s Ministry of Commerce, seen to come as soon as this month based on typical review timelines, thus, clearing one of the final hurdles for the deal.

Previously, the deal had secured regulatory clearance from the European Union.

One of the conditions put forth by the regulatory body which asked for the divestiture of operations of the Snow beer, was accepted by the two companies.

The companies agreed to sell SABMiller’s 49% stake in its joint venture with China Resources Beer (Holdings) Co., which controls Snow beer, back to its partner for $1.6bn, a deal which was also nearing approval from China’s commerce ministry.

Following divestitures, the deal will keep Budweiser, Beck’s and Stella Artois under AB InBev’s roof, while ceding control of brands including Miller in the U.S. and Peroni and Pilsner Urquell in Europe.

In the U.S., AB InBev has agreed to sell SABMiller’s stake in the MillerCoors joint venture.

Source: Bloomberg



Singapore’s sovereign funds buy $1bn in Alibaba stock in SoftBank sale

Singapore’s sovereign wealth funds bought stake worth $1bn in Chinese e-commerce company Alibaba Group Holding Ltd’s as part of an $8.9bn sale by Japan’s SoftBank Group Corp, Alibaba’s biggest shareholder.

Singapore’s GIC Private Ltd. and Temasek Holdings each purchased $500m of Alibaba shares at $74.00 a share through their subsidiaries. Alibaba purchased $2bn of its own stock at the same price.

Members of the Alibaba Partnership of senior executives and founders purchased another $400m at the $74 per share price.

Softbank also offered $5.5bn in debt securities which could be exchanged for equity in 3 years.

Further, Softbank plans to offload at least $7.9bn of stake in Alibaba to reduce it’s debt.

Source: Reuters

China to issue its first offshore sovereign bond in London

China’s Ministry of Finance plans to launch its first offshore sovereign bond in London. The CNY 3bn ($548m) three-year bond is being marketed at a price similar to bonds being sold in Hong Kong, which serves as the common venue for launching of Chinese debt aimed at the offshore market.

UK’s finance minister George Osbourne stated that China’s decision of choosing London for its bond issuance reinforced the UK’s strong economic and financial relationship with China.

Previously in 2015, The People’s Bank of China sold CNY 5b of short-term central bank notes in London for the first time.

Source: Yahoo Finance

China Minmetals seeks $2.3bn for financial asset restructuring

According to a fundraising document, China Minmetals Corp, a metals trading firm announced that it was raising RMB15bn ($2.3bn) from investors to help restructure and list its financial assets. 

Minmetal’s subsidiary Kingray New Materials Science & Technology, a loss-making electrical components maker, is seeking to issue shares to a Minmetals Corp subsidiary, China Minmetals Corp Ltd, to acquire all of Minmetals Capital Holdings, which owns the metals trader’s financial assets.

Kingray also plans to issue shares to Minmetals Corp to buy a 10%stake in ICBC-AXA Life. The total financial assets planned to be injected into Kingray as part of the restructuring is estimated to be valued at RMB19.7bn yuan.

After the restructuring, Minmetals Corp’s financial assets will be publicly traded via Shanghai-listed Kingray.

Source: Reuters


Petrobras seeks 1bn China-loan faster than planned

Brazil’s state-controlled oil company Petrobras is seeking a $1bn loan from the Export-Import Bank of China earlier than originally planned, on surging debt service costs amid plunging oil prices.

The loan was originally planned for 2017, but rising debt service costs and falling revenues due to softer oil prices compelled the company to avail the loan earlier than planned.

The company is engaged in negotiations with the Chinese lender after signing a term sheet on Monday.

The proceeds from the loan would be utilised towards its equipment and service contracts from Chinese suppliers.

Previously, the company had secured a $10bn loan from China Development Bank Corp. as part of a deal to supply crude to the Asian country. 

Source: Bloomberg

China’s Communist Party warns about debt

China’s leading Communist Party mouthpiece ‘People’s Daily’ interviewed an unnamed person who warned about the country’s rising non-performing loans and the risks associated with it.

The interview stated that the country should make deleveraging its top priority over short-term growth fueled through monetary easing policies.

The daily also made a reference to Premier Li Keqiang’s thought on banks swapping debt for equity to cut excess borrowing by Chinese firms. The daily stated that whilst bankruptcies were to avoided, “zombie” companies beyond salvage should be allowed to fail because debt-to-equity swaps would be costly and self-deceiving.

Separately, Fitch Ratings warned that China’s accumulation of debt and diminishing economic returns could spiral the nation into either a financial crisis or a Japanese-style growth slump. Further, a spike in mortgage lending meant that banks could be exposed to significant losses if property prices dropped sharply.

Brokerage firm CLSA also warned that actual NPA’s in China could be at least nine times higher than government’s quoted figures, suggesting potential losses of c.$1tn.

Source: Bloomberg

Property developer Kaisa Group files for Ch-15 restructuring

Kaisa Group Holdings Ltd., a Shenzhen, China-based property developer filed a Chapter 15 petition (Case: 16-11303) in the Manhattan court on 5 May 2016. The company used this provision of U.S. bankruptcy law to deal with U.S. creditors or lawsuits when reorganizing in a Hong Kong court.

Kasia had $14.9bn in debt, backed by $16.1bn of assets.

Kaisa stated that holders of 96% of its offshore debt, supported the company’s restructuring agreement negotiated in the Hong Kong.

The company anticipates that the Hong Kong court will approve its restructuring plan.

Further, the company plans to meet with creditors on 20 May 2016.

Source: Bloomberg

S&P lowers outlook on China; says domestic-led economic growth moving “slower than expected”

Ratings agency S&P lowered its outlook on China’s credit rating of ‘AA-‘ to negative from stable, citing the Mainland’s attempts to overhaul its economy from an investment-led and export-oriented one toward domestic-led growth was proceeding at a slower pace than expected.

The move follows that by Moody’s, which lowered its outlook on China to negative earlier in March 2016 for its credit rating of Aa3. Fitch Ratings rated China as ‘A+’ with a stable outlook.

As part of its rationale on the lower outlook on China, S&P outlined the following reasons:

  • gradual increase in economic & financial risk to the government’s creditworthiness
  • weakening of sovereign and corporate credit metrics
  • increased reliance on credit to push the sluggish economy

Source: WSJ

Petrobras gets $10bn loan from Chinese bank in an oil supply deal

Brazil-based Petrobras received a $10bn loan from China Development Bank as part of a deal to supply oil to the country. The loan is the outcome of an accord signed between Brazil and China last year.

The amount of oil to be supplied as part of the contract was not disclosed. The move would provide the beleaguered Brazilian company with a lifeline which struggled with falling oil prices, a corruption scandal and c.$20bn in debt maturing by 2018.

Source: Bloomberg

Citi’s economists lower 2016 global growth forecast to 2.5%

Citigroup’s economists on Wednesday lowered their forecast on 2016 global economic growth to 2.5% from 2.7% percent due to a slowdown in activity in developed economies in addition to weakening emerging markets.

Reasons cited by the economists were a probable “mismeasurement” of China’s economic growth data and a more than expected deterioration among emerging economies, factors which could drag down global growth to below 2%.

Source: Reuters