Henderson Land's debut dollar bond raises $500 million

Hong Kong's Henderson Land Development took advantage of upbeat credit markets yesterday to raise $500 million from a debut bond offer. The unrated property developer and its bankers, J.P. Morgan and HSBC, moved swiftly during the day to sell the 10-year deal and by 9pm (Hong Kong time) priced with a spread of 210bp over US Treasuries.

The issue came on the heels of Hutchison Whampoa's well-received $3 billion deal a day earlier, although Henderson priced comfortably inside the 235bp Hutch paid on its 10-year tranche. This latest bond also compares favourably to the roughly 200bp that Swire's existing 2019 bonds are trading at, particularly given that Henderson is an unrated, first-time issuer.

"The Hutchison deal did well and Henderson saw there were other issuers in the market next week, so they took the opportunity to go into a free market this week," said one banker on the deal. "They decided to move through with the deal in the morning and from start to finish the deal took less than 12 hours, which is a phenomenal achievement."

SM Investments in the Philippines is planning a five-year deal next week and State Bank of India and several Korean issuers are also talking about deals.

It was clear after the Hutchison deal that investors had an appetite for the region's blue-chip issuers. That transaction grew from $2 billion to $3 billion on the back of a strong response, though 60% of the deal was privately placed to investors in the US. For Henderson, which obviously lacks a track record with US investors, Asian buyers played the most important role, picking up 86% of the deal. The rest was sold into Europe, the Middle East and Africa.

Some other Hong Kong property developers have bonds in the market, with Sun Hung Kai's 2017s trading at 130bp over Treasuries, though bankers on the Henderson deal claim these issues are small and rarely traded, so not a valid pricing comparison.

It is clear the deal gathered momentum during the day. Initial price whispers suggested a spread of 220bp over Treasuries but, with $1.3 billion of demand, the deal finally printed with a coupon of 5.5% and at a price of 99.795, to yield 5.527%.

Most of the support came from real-money investors. Banks bought 38%, fund and asset managers 27%, retail investors 24% and the remaining 11% was snapped up by insurers and others.