Hong Kong blue-chip CLP Power closed a $600 million dual-tranche bond last night that confirmed just how much demand there is for investment-grade names at the moment.
The deal was initially announced as a $300 million 10.5-year bond on Thursday morning, and was met with very strong demand from investors, with the deal multiple times subscribed shortly after its announcement.
“As you can imagine for a name like CLP, the book was very strong,” said a source. “The company also received reverse enquiries from investors for a 15-year bond,” he added.
On the back of the reverse enquiries and the strong demand for the 10.5-year bond, CLP decided to add a 15-year tranche later in the day.
The initial guidance for the $300 million 10.5-year bond was Treasuries plus 145bp, which was revised to a final guidance of Treasuries plus 120bp to 130bp. The guidance on the 15-year bond was Treasuries plus 165bp to 175bp. As there is no 15-year Treasury benchmark, the 15-year bond was priced over the 10-year Treasuries and the spread was determined by the US Treasury yield curve as well as feedback from investors.
The leads were guiding investors towards a $200 million deal size for the 15-year tranche, but it ultimately raised $300 million. The size of the 10-year tranche was kept at $300 million, and both bonds priced at the tight end. Demand was said to be $3.3 billion for the 10-year piece and $1.5 billion for the 15-year piece.
CLP had sent out RFPs in September. The fees for its latest bonds were said to be “in line” with the previous deal — which had paid 15bp to 25bp. The issue is expected to be rated A1 by Moody’s and A by Standard & Poor’s. The company is said to be pre-funding for next year.
The coupon for the 10-year piece was fixed at 2.875% and the bonds reoffered at 98.197 to yield 2.998% and the coupon for the 15-year piece fixed at 3.375% and the notes reoffered at 99.174 to yield 3.446%.
Citi, Goldman Sachs, HSBC, Mitsubishi UFJ and Standard Chartered were the arrangers.
