Property developer Hongkong Land priced a $500 million 10-year bond on Friday in a deal that came as a surprise after a week of inactivity in Asia’s dollar market.
The deal was initially marketed at 300bp over US Treasuries and attracted decent demand from investors, allowing the company to tighten the deal to 290bp. The lack of supply from highly rated Asian issuers helped. The only other deals to price last week were two small issues from Korea’s Shinhan Capital and National Federation of Fisheries Cooperatives, for a combined size of less than $60 million, and the last high-grade bond to print in Asia was Sinopec’s $3 billion triple-tranche bond on May 11.
Since then, the continuing uncertainty over the euro’s future has made it hard for issuers to bring deals to market. But there is clearly a certain level of appetite for decent quality paper. Hongkong Land is rated A2 by Moody’s and A- by Standard & Poor’s, and enjoys a good reputation among investors, which helped it to attract $1.7 billion of orders from more than 140 accounts.
At 300bp the deal also seemed to offer an attractive premium over the developer’s existing 2025 bonds, which were trading at around 305bp on Friday, but the final price was in line with Hongkong Land’s implied yield curve — though still around 30bp wide of comparable Hong Kong corporate names such as Hutchison Whampoa and Swire Pacific. Given the conditions, that looks like a good result.
The Reg-S deal was issued off Hongkong Land’s medium-term note programme and was mostly sold to Asian investors, which took 85% of the allocation. European investors bought the remaining 15%. By account type, asset managers were allocated 42%, banks 26%, insurers and pension funds 24%, and private banks and corporates 8%.
HSBC, Mitsubishi UFJ Securities and Standard Chartered were joint bookrunners. The coupon was fixed at 4.5% and the notes were reoffered at 98.796 to yield 4.652%. They will mature on June 1 2022.
