Hong Kong companies continue to rush to the bond markets as banks cut back on lending in the region. The latest addition is Henderson Land, which closed a $300 million tap of its recent $400 million 4.75% notes due 2017 on Wednesday night, nearly doubling the original deal size.
The company took advantage of buoyant investor demand to raise slightly more than the $200 million to $250 million deal size that the leads — DBS Bank, HSBC, J.P. Morgan, Morgan Stanley and Standard Chartered — had guided investors towards.
Investor demand was robust, with the deal attracting an order book of $2.7 billion from 120 accounts. The bonds priced at Treasuries plus 410bp, at the final guidance and 10bp inside the initial guidance which was in the area of 420bp over Treasuries.
Its tap came just a week after Henderson Land had priced its $400 million bond at Treasuries plus 415bp, which were trading at around Treasuries plus 405bp yesterday. Coming so soon after the initial deal, some wondered why the company had not raised $700 million right from the start. However, the tap seemed to be well-absorbed by the market, and there was certainly strong demand from investors.
“Henderson Land’s existing $400 million bonds have come back in to where they were trading previously so that shows deals are being digested,” said Owen Gallimore, head of Asia credit strategy at ANZ yesterday.
The deal overwhelmingly went to Asian investors, which were allocated 91%. The rest went to Europe. Fund managers were allocated 48%, private banks 27%, banks 14%, insurers 8% and companies 3%. The notes were reoffered at 99.226 to yield 4.927%.
On Tuesday night, another Hong Kong borrower — Wheelock and Co — priced a $400 million five-year debut bond. Wheelock is a listed investment holding company and the parent company of Wharf Holdings and Singapore-listed Wheelock Properties.
Its subsidiary Wharf Holdings’ had priced its $600 million bond in January and followed up with a $300 million tap shortly after that. The announcement of Wheelock’s deal had an immediate impact on Wharf’s bonds, which widened in volatile fashion before tightening back in again.
“The Wharf bonds widened 30bp to Treasuries plus 380bp which is a big move for a diversified single-A credit. It has come back strong following the over reaction from Treasuries plus 380bp to Treasuries plus 330bp today,” Gallimore added.
Notably, Wheelock priced at Treasuries plus 400bp, which was flat to Wharf Holdings’ initial deal. This was a positive outcome for Wheelock as it is unrated and has a holding company structure and investors generally demand a bigger new issue premium for that. While Wheelock has tapped the Singapore dollar bond market before, this was the first time it was issuing a dollar bond. The Wheelock 2017s performed in secondary, tightening by about 10bp.
The deal attracted a massive $4.5 billion order book with over 200 orders. The notes were reoffered at 99.662 to yield 4.827%. DBS, HSBC and Standard Chartered were joint bookrunners.
Elsewhere, Korea Development Bank (KDB) also priced its $750 million five-and-a-half-year bond at Treasuries plus 275bp early Wednesday morning. The bonds priced at the tight end of the Treasuries plus 275bp to 285bp final guidance. The coupon was fixed at 3.5% and the notes were reoffered at 99.599.
The deal attracted a $4 billion order book from 240 accounts. By geography, Asian investors were allocated 50%, US investors 33% and European investors 17%. Fund managers were allocated 59%, banks 17%, insurance 16%, private banks 4% and central banks 4%. BNP Paribas, Citi, Deutsche Bank, HSBC, J.P. Morgan, KDB Asia and RBS were joint bookrunners.
