Bank of East Asia, Hong Kong largest independent bank, has announced a Reg S $400 million subordinated bond deal with Citigroup and Goldman Sachs appointed as bookrunners. The BBB/Baa1 rated deal represents BoEA's first foray into the international debt market since January 2001 when the bank similarly raised a $550 million from a 10-year non call 5-year issue that priced to yield at 7.622% or 187.5bp over Libor.
Proceeds will be used to refinance the call option on the previous deal. The new deal also has a 10-year non call five-year structure, with a 50bp step up if it is not called.
The brisk roadshow schedule is slated to hit only three cities beginning next Monday (November 28). Investors in Hong Kong will be the first to get a look at the deal. Roadshows will then head to Singapore on the 29th, before wrapping up in London on the 30th.
According to investors, indicative pricing is being talked around the 70bp to 80bp mark over Libor, equating to a Treasury spread of about 105bp to 115bp over. Formal price talk, however, will be released at the start of roadshows next week.
Given that there are no hard comparables, on a like for like basis most specialists quote Korea's Woori Bank, which has a lower tier 2 2014 non call five-year (2009) bond in the market trading at the 60bp over Libor, or 100bp over Treasuries.
Market players agree that BoEA should price slightly wider than Woori, which has a Baa2/BBB+ sub debt rating.
