IFLR 1000
The Guide to the World's Leading Financial Law Firms

This has been the year of Rmb-denominated "dim sum" bonds in the Hong Kong market, with all of the leading international firms getting into the action. 2009 signalled the start of the market but they have grown in popularity since then and firms will be hoping this trend continues. "Rmb bonds are really hot," says one debt capital markets partner, "they're what everybody either doing or wants to be doing, and you need to be at the forefront of these types of loans to be competitive. This might be a repetition of history, like when everybody wanted to do the euro-yen bonds in the late 1980s. But it's most likely that dim sum bonds aren't hype and that they're here to stay as long as Beijing supports them."

China's capital control regime has been restrictive for institutional investors in the past and these same investors are now looking at the dim sum bond market as a more flexible issuance option. By listing on the Hong Kong Stock Exchange, investors have an increased opportunity to carry bonds in Chinese companies. It goes without saying that investors have jumped at the chance to enter the mainland market-as the Financial Times reported on April 26th, there were more dim sum bonds offered in Hong Kong in the first four months of 2011 than there were during the entire year of 2010.

In general the Hong Kong debt capital markets space is also nearly split between high-yield and convertible bonds work, with most firms prioritising one or the other. Most of the US firms in Hong Kong focus almost exclusively on high-yield and Rmb-denominated work over convertible bonds, which is traditionally a stronghold of magic circle practices.

"There are really two types of debt practices in Hong Kong, and they're really not similar kinds of work," says one partner. "You've got people who are good at high-yield, and that's the growing market and then you've got people that just focus on the convertible bond work. There are really two categories, there-most practices just do one or the other." Despite this general market sentiment some notable firms continue to have top expertise across high-yield, convertible bonds and dim sum work, and these have a rather unique place in the market.

Allen & Overy's Hong Kong debt capital markets practice derives its top-tier position from a number of attributes. For one, Allen & Overy's place in the market is somewhat unusual because of the firm's status as a leading magic circle firm with a top high-yield bond practice. While the rise of the US firms has meant that much of the high-yield bond business has shifted away from Hong Kong's top UK firms, Allen & Overy has managed to maintain its practice in high-yield and other debt products because of its commitment to this practice area and the expertise of its partners. "Allen & Overy has really been able to ride the market," comments a partner at a rival firm. "They've used their expertise to stay competitive in high-yield as well as convertible bonds."

In the high-yield space last year, A&O advised on transactions for Energy Development Corporation, Vista Land & Landscape, SMC Global Power Holdings and the Travellers International Hotel Group. The team also advised on Alliance Global Group's $500 million guaranteed high yield bond.

A&O has also managed to stay at the forefront of Hong Kong's growing Rmb-denominated bond trend. In a seminal offering, Hong Kong partners Walter Son and James Grandolfo advised Asian Development Bank (ADB) on its Rmb1.2 billion ($186 million) offshore bond offering managed by Deutsche Bank and Bank of China. The transaction represented a number of firsts in the history of Hong Kong Rmb bond offerings-including being the first long-dated offshore Rmb issuance, the first offshore Rmb bond issuance by a supranational issuer, the first such issuance to be rated triple-A by the leading ratings agencies and the first to be listed on the Hong Kong Stock Exchange. While most offshore Rmb bonds have tenors of less than five years, the ADB was the longest tenured issuance ever in the market.

The Hong Kong team also has a presence that expands across the larger region, as exemplified by Grandolfo and fellow partner Andrew Harrow acting as international counsel to the State Bank of India (SBI) on the issue of $1 billion bonds and a subsequent issue of €750 million bonds due in 2015. This represented SBI's first Rule 144A offering and was a landmark in that it allowed the bank to access the US market. The Euro issuance was also one of the largest euro-denominated issues ever to be done by an Asia financial institution outside of Japan.

The firm is a trusted advisor for international issuers, and its client list benefits from the firm's global relationships with top companies and financial entities. The firm's especially strong network with leading international banks means that Clifford Chance often represents the underwriters in convertible bond issuances. The Hong Kong team also has expertise in high-yield and the emerging market for Rmb-denominated bonds.

Leading partner Connie Heng's continuing commitment to onshore and offshore Rmb-denominated debt markets is a continuing asset to the firm. In late 2010, Heng led the Clifford Chance team that advised Citi in its role as placement agent for a $200 million international issue of secured convertible bonds by Chaoda Modern Agriculture Holdings. The deal involving China's leading modern agricultural enterprise also included approximately a $150 million share placement. The equity-linked transaction involved upstream guarantees and a security package from certain offshore subsidiaries of Chaoda.

Clifford Chance's Hong Kong team also has regional reach across Southeast Asia, having recently advised the underwriters in the government of Malaysia on a $2 billion Islamic sovereign bond issue. The dollar-denominated bonds were issued in June 2011, with a $1.2 billion trance of five year notes at 3% and $800 million in ten-year notes at 4.6%. The shariah-compliant bonds mean that securities for the notes had to be backed by assets where partial ownership is granted to the rent-receiving bondholder.

Davis Polk's debt capital markets team has been substantially bolstered by the additions of Bonnie Chan, Antony Dapiran (both from Freshfields) and Paul Chow (Linklaters) who will provide a local Hong Kong law service. One partner at a rival firm tells us that, "Davis Polk is really at the top of the market in the high-yield space, and they're really investing in their capital markets practices with the addition of the Hong Kong law capability and the new partners. Their numbers are also expanding quickly as they're getting so much work. They're definitely one of the go-to firms for high-yield deals."

Indeed, Davis Polk's debt practice is one of the strongest in Hong Kong. The Greater China team seems to do more debt deals than any other firm on the region-35, in 2010. However, the firm manages to score in the highest ratings on quality as well as output, and is especially known for its leading high-yield debt practice. Indeed, one client describes partner Bill Barron as "one of the best on the street."

Another client adds that, "They're very responsible and reliable - they basically run the whole transaction for us except for when there is a problem to alert us to. It's kind of a dream service for an an-house counsel. We work with quite a few other law firms, and we have a lot to compare to. Davis Polk is a cut above the rest."

In one key high-yield debt deal this past year, Davis Polk's debt capital markets team advised the underwriters in relation to the Rule 144A/Reg S offering by CNPC (HK) Overseas Capital. CNPC is ultimately owned by the China National Petroleum Corporation, and the offering included $700 million 3.125% guaranteed senior notes due 2016, $650 million 4.5% guaranteed senior notes due 2021 and its $500 million 5.95% guaranteed senior notes due 2041.

The debt team has also been active in the Rmb bond market, advising clients such as: Evergrande Real Estate, Shui On Development, Sinochem and China SCE Property on both offshore and synthetic bonds, in the latter category working on four out of the five market as of April 2011.

Once again, Linklaters has distinguished itself with a breadth of debt capital markets expertise that extends across all types of offerings. While the team is undoubtedly top in the convertible bonds space, the group has also been a key player in advising on historic precedents in Hong Kong's Rmb-denominated bond market and has been active in developing innovative structures like corporate hybrid securities.

In one such market-leading transaction, Linklater's debt capital markets team led in developing the legal infrastructure required for the offshore Rmb bond market by advising on the Hopewell Holdings Infrastructure transaction. Hopewell Highway was a landmark deal because it was the first ever offshore deal to use Rmb financing. The team also advised on myriad other Rmb-denominated deals, such as Caterpillar Financial's Rmb1 billion ($155 million) 2% bonds, Ministry of Finance, BOC, CDB and CEXIM's $2.3 billion in Rmb deals, Sinochem in Rmb3.5 billion 1.8% bonds and China Resources Power Holdings Rmb1 billion 2.9% bonds due 2013 and Rmb1 billion 3.75% bonds due 2015.

Linklaters also recently advised the HSBC with regards to Rmb500 million notes by the World Bank due in 2013 at 0.95%. The deal represented the first time that the World Bank has issued an Rmb bond, and was also the first Rmb bond done in Hong Kong in 2011.

Sidley's debt capital market's team primarily focuses on major, high-yield debt transactions-and clients seem to agree that they're among the best at what they do: "They are very capable. They are very responsive and provide a good service to us. We also like them for their international network. They're very good."

Clients also praise the quality of the firm's responsiveness and accessibility. "They are very responsive quickly," one client says, "and are always on point. They're always approachable, 24 hours a day."

Showing its high-yield ability, Sidley's team recently represented Evergrande Real Estate Group on its Rmb9.25 billion ($1.4 billion) dual-tranche synthetic offshore Rmb bond. The offerings included Rmb5.5 billion 7.5% Senior Notes due 2014 and Rmb3.7 billion 9.25% Senior Notes due 2016. This Reg S bond was denominated in Rmb and settled in US dollars, and the deal was Asia's largest ever high-yield bond as well as the largest Rule 144A/Reg-S bond since 2001.

Sidley's capabilities, however, are not at all limited to the high-yield space. The debt team has also had a strong showing in winning some of the major Rmb-bond mandates in Hong Kong, including advising the Export-Import Bank of China on its Rmb5 billion ($776 million) bond offering in Hong Kong. The two-tranche bond included a retail public offering of Rmb4 billion 2.65% bonds due 2013 and an institutional Rule 144A/Reg S placement of Rmb 1.95% bonds due in 2011.

Skadden, like many of the other US firms in Hong Kong's top tier, has a market-leading debt practice lead by its expertise in high-yield offerings. Skadden has good relationships with international and Chinese financial institutions, as well as a presence working on bond issues in Southeast Asia's emerging markets. Skadden's range of expertise is exemplified by the variety of companies and countries where they are able to support clients in high-yield offerings.

"I think that the partners we've worked with at Skadden were very experienced and quite creative in their advice and solutions to issues, and their team in general is very high-quality," says one client.

For example, in March 2011, Skadden's team advised Credit Suisse and Morgan Stanley as joint bookrunners in a $130 million Rule 144A/Reg S high-yield offering of 11.5% guaranteed senior notes due 2015 by wireless telecommunications company Bakrie Telecom (Indonesia). The consolidated notes formed a single series with Bakrie Telecom's previously issued $250 million of 11.5% guaranteed senior notes due 2015.

Skadden also recently represented geothermal energy producer Philippines Energy Development in its $300 million Rule 144A/Reg S high-yield offering of 6.5% notes due 2021, which were listed on the Singapore Stock Exchange.

Cleary's addition of a Hong Kong law practice this year will surely expand its already robust offerings to clients in the debt capital markets arena. The firm currently has a record of strong mandates for convertible bond offerings and high-yield work, and has also pushed through some seminal transactions in Hong Kong's emerging Rmb bond market.

In one strong mandate in the high-yield area, Cleary advised Morgan Stanley and Citi as the underwriters in the offering of Rmb1.2 billion ($186 million) $-settled 10% senior notes due 2014 by LDK Solar. The transaction was the first high-yield bond offering and the first Rmb-denominated issuance by a Chinese solar energy company. LDK has a long-term relationship with the firm, as Cleary also advised LDK Solar on a convertible notes issuance in 2008.

Cleary's Hong Kong partners were also part of a multi-jurisdictional team that advised Russian VTB Bank on its first Rmb-bond offering in December 2010. Cleary represented VTB Bank in its issuance of Rmb1 billion worth of three-year bonds. The transaction represents the first time a Russian borrower and emerging markets issuer outside of China has issued bonds in the Chinese currency.

The firm also has strong relationships with many issuers in the developing Philippines market, and has advised on sovereign debt and bank notes offerings.

Paul Hastings' deep relationships with Greater China real estate companies has allowed the firm to build its debt capital markets practice by capitalizing on the strength of its partners and relationships with top clients in the real estate sector. This has led to many strong mandates from real estate clients in the convertible bonds and Rmb-denominated securities areas.

Clients seem pleased with the firm's rising debt capital markets abilities. One client tells us that, "The Paul Hastings team was responsive, accessible and understood the important issues." The same client also had high praise for partner Vivian Lam. "She's very knowledgeable," the client says. "She offers good alternative solutions and advice, and is a good sounding board."

In one example of a large, real-estate related convertible bond mandate, the Paul Hastings team advised Sino-Ocean Land on its $900 million convertible securities offering. The equity-linked transaction was the first convertible securities offering of its kind in Asia, and the fact that convertible securities were treated as equity made negotiating the terms and conditions of the deal particularly complicated because there was no benchmark against traditional convertible bonds. The deal represented the first time that perpetual subordinated convertible securities of this type were offered and the transaction was the biggest international equity-linked issuance for a mainland Chinese property developer.

Clients seem pleased with Shearman and Sterling's Hong Kong and Greater China team, which advises clients on a broad spectrum of debt and equity-linked derivative securities as well as high-yield debt. As one client tells us: "We work with Won Lee on the high-yield side, and Shuang Zhao for convertibles. They are very strong in both of these products. Both partners have access to global resources and people in Hong Kong for both types of exercise," says the client. "In the convertible space, I consider their ability to adjust to problems under a tight timetable to be superior - they have a high level of experience and are highly technical. High-yield products and services can be very typical, but they add something that is unusual."

In one of this year's most prominent mandates, Shearman's team advised Sinochem Overseas Capital Company on the biggest international bond launch from a Chinese issuer in history. Partner Won Lee led the Shearman team in representing Citigroup Global Markets, HSBC and UBS as purchasers in connection with Sinochem's Rule 144A/Reg S offering of $2 billion in guaranteed senior notes due in 2020 and 2040.

Shearman's team also advised Merrill Lynch, Pierce, Fenner & Smith as the initial purchaser in the China Medical Technologies $150 million convertible bond offering. The total was comprised of senior notes at 6.25% due in 2016.

Clients also have praise for the firm's global network and client services. One industry leader who was worked on the other side from Shearman comments that "communication with them is pretty smooth, and they can respond to our counsel's request within hours-for example, with regard to securities law and SEC guidance if we need to have additional advice from people with a strong background in this area, they can source that within days from their global network. Partners respond to us and access global resources."

Freshfields Bruckhaus Deringer continues to have a strong debt practice which advises clients on a range of debt products. The firm's US securities group augments the practice's ability to advise clients in high-yield and other issuances usually focused on by US firms.

Freshfields continues to have a comparative advantage in the high-yield bond space. Recently, the debt capital markets team advised Green Dragon on its issue of $100million 7% convertible bonds due 2015. The team also represented China Unicom on its issue of $1.84bn 0.75% guaranteed convertible bonds. When the deal closed, it was the biggest international convertible bond issuance in Asia outside of Japan.

Baker & McKenzie advises clients on a range of debt products, and its close relationships with local Hong Kong companies often puts the firm in a good position to serve their needs on the debt side. For example, partners Andrea Lockhart and Milton Cheng recently advised Cheung Kong Infrastructure Holdings on its issue and offering of 6.25% guaranteed perpetual securities valued at $1 billion. The bond issuance was the first to be done by a non-Asian financial entity since 1997, and could pave the way for similar issues in the future.

Herbert Smith's debt capital markets team, led by partner Kevin Roy, is strong in convertible bonds issuances and the new Rmb-denominated products.

Clients had special praise for Roy, with one client telling us that, "I think he's a five out of five when it comes to technical skills. He's got a good handle on all the basics for these types of offerings since he's such an experienced lawyer. We ran into difficult issues and he came up with some workable solutions that solved the problem. These are the types of things that only seasoned professionals can come up with. He's also cross product and not just knowledgeable in capital markets work. He's able to extend his knowledge across the board and he gave us a positive perception of Herbert Smith overall. From our perspective he's very hands on, and provides good guidance to his team."

Latham & Watkins has a strong showing across the high-yield and convertible bond areas of the debt capital markets space. Clients compliment Latham & Watkins on their capabilities and way of servicing clients. "They are pretty strong among US legal firms," says one client, "They are near the top in terms of technical skills and structuring capabilities. One of the deals we did for a developer in China, there were a lot of carve-outs in the covenant package for the high-yield offering, and Lathams played a critical role in resolving those issues. I think the key difference here is that they are more practical and they give three or four options. They never just follow the banker's instructions and act simply as a messenger. They are more keen to find a solution and direction. Latham's team is one of the strongest on the street."

Underscoring the firm's high-yield capability, Latham's debt capital markets team recently advised underwriters Deutsche Bank, Credit Suisse and JP Morgan in relation to the Rule 144A/Reg S offering by PT Bumi Resources of $700 million of 10.75% guaranteed senior secured notes due 2017.

In March 2012 Mallesons Stephen Jaques merged with King & Wood to form King & Wood Mallesons, the first Sino-Australian firm. In the first phase the two firms will combine their Australian, Chinese and Hong Kong partnerships under a Swiss Verein structure. Full financial integration plans are yet to be announced.

The firm's debt capital markets team also benefits from its connection with the firm's top-tier structured finance and securitisation practice. The firm received a boost in September 2011 when partner Sau-Wing Mak joined from Simmons & Simmons.

The team has an ongoing relationship with Bank of China, working with it on Rmb-denominated products and issuances. The firm's historical relationship with the Australia and New Zealand Banking Group Limited (ANZ) means that the Hong Kong team also has a lead role in advising the bank on China-related debt and bond issues.

White & Case's debt capital markets practice has a specialisation in advising clients on high-yield, convertible bond issuances.

Recently, White & Case's capital markets team advised Bank of America Merrill Lynch as the sole global coordinator and joint bookrunner in MIE Holdings Corporation's $400 million Rule 144A/ Reg S debut high-yield bond. MIE operates three oil fields in the northeastern province of Jilin, China, and was the first Chinese oil exploration and production company to issue a high-yield bond. Proceeds will be used to fund MIE's $170 million acquisition Kazakhstan oil & gas E&P company Emir-Oil, in addition to refinancing a loan facility from Citic Bank. The 9.75% bonds are due in 2016.

Simmons & Simmons debt capital markets team advises on a range of market issues, from "plain vanilla" bonds to complex trades to convertible bonds. The firm's strong presence in the local Hong Kong and Chinese markets also means that it has a robust pipeline of Rmb bond issuances. Simmons & Simmons debt practice includes a range of clients including China's Ministry of Finance, China Power International Development, Bank of China and Bank of East Asia (China).

The team was hit in September 2011 when Sau-Wing Mak moved across to Mallesons Stephen Jaques.

DLA Piper's debt capital markets team is strong in bonds and Rmb-denominated debt products due to its good relationships with Chinese and Hong Kong businesses. The firm also has a strong foothold in working with Korea-based companies through its Hong Kong office.

One of the largest and most complex issuances that the team recently worked on was in advising LG Display Co as borrower and issuer in connection with a $600 million financing arrangement that included a $350 million offshore floating rate note facility and a $250 million onshore term loan facility. This represented one of DLA Piper's largest ever debt deals, and involved 12 international financial institutions that added complexity to the issuance.

Fried Frank Harris Shriver & Jacobson is known for its abilities in high-yield debt. Clients praise both the firm's abilities and the quality of their relationships with financial institutions. "They're very knowledgeable in high-yield," one client tells us, "The have a good relationship with all of the major banks in the region. They're also very responsive and accessible-communication is excellent."

Fried Frank recently advised UBS, Hong Kong, as manager, in relation to Hopson Development Holdings' issuance of $300 million of its 11.75% senior notes due 2016.

Hogan Lovells' debt capital markets team serves clients on an array of high-yield bonds, convertible securities and Rmb-denominated issuances.

Partner Philip Hyde works on an ongoing basis with Bank of New York Mellon, acting as trustee on a large number of bond issues throughout the Asia region – including high yield bonds, convertible bonds and eurobonds.

The Hogan Lovells team is also advising China International Capital Corporation (Hong Kong Securities) in its role as sole lead manager and bookrunner in connection with an issue of Rmb-guaranteed bonds issued by OCT Travel Investment due in 2014.

Mayer Brown JSM has invested heavily in its capital markets practice this past year, with the hires of partners Jason T Elder and Ben Sandstad. Both partners bring deep corporate finance, debt and securities-related experience that should be a substantial asset to the firm's team.

Recently, Mayer Brown JSM represented state-owned Beijing Enterprises Holdings and Mega Advance Investments as United States and Hong Kong legal counsel in relation to the issuance of $600 million 5% guaranteed senior notes due 2021 and $400 million 6.375% guaranteed senior notes due 2041.