CLP Power Hong Kong (CLP Power) has completed a three-year A$500 million ($337 million) dual-tranche floating and fixed-rate bond offering through its wholly-owned subsidiary, CLP Power Hong Kong Financing.
This transaction marks the first Kangaroo bond issuance by a Hong Kong commercial corporate entity in the Australian market. Kangaroo bonds are Australian dollar-denominated bonds issued by foreign entities in Australia.
According to a July 15 CLP media release, the issuance is structured into two tranches: a three-year A$350 million floating-rate note tranche and a three-year A$150 million fixed-rate note tranche. The Kangaroo bond is guaranteed by CLP Power.
A CLP spokesperson told FinanceAsia: “The Kangaroo bond is issued under CLP Power's medium term note programme, under which bonds in aggregate amount of up to $4.5 billion can be issued for general corporate purposes.”
"This successful issuance in the Australian market enables us to further diversify our sources of funding in a cost-effective way, and we are encouraged by the favourable market response," said Alexandre Keisser, chief financial officer of CLP Holdings, in the media release.
The floating-rate tranche was priced at 85 basis points above the benchmark three-month Bank Bill Swap (BBSW) rate. The fixed-rate tranche was priced at 85 basis points above semi-quarterly coupon matched asset swap (SQASW) rate, equivalent to an annualised rate of 5.1%; both are expected to receive an A+ rating from S&P, according to the media reoelase
The Kangaroo bond offering has expanded CLP Power’s debt capital market financing activities to the Australian onshore public market for the first time.
"We are delighted to have witnessed strong demand for this Kangaroo bond offering, which attracted participation from a diverse group of institutional investors across the UK, Australia and Asia," said Joseph Law, managing director of CLP Power, also in the release.
"The strong market response to the offering is a vote of confidence in CLP Power’s business, and we will continue our efforts to deliver our 2024-28 Development Plan to support Hong Kong’s growth,” Law added.
The plan, released in November 2023, includes the company's efforts to decarbonise.
Pricing
According to ANZ, the sole coordinator and joint lead manager on the transaction, the pricing of the issuance made it more cost-effective than other international channels of debt capital market financing after swapping the proceeds into Hong Kong dollars on the date of completion.
"The debut Kangaroo bond by CLP Power is a significant transaction that underscores the strength of Hong Kong's corporate issuers in the global capital markets," commented Kang Jae Kim, head of capital markets Asia at ANZ, in the media release.
Hong Kong-based Kim added: "This issuance will further enrich the diversity and depth of the Australian bond market, benefiting both domestic and international investors."
KDB Asia and KIS Asia acted as joint lead manager and co-manager, respectively.
