The company, one of KoreaÆs top car manufacturers and rated Baa3/BBB, announced the offering earlier this week. The deal was due to price Thursday under a guidance of 90bp over Libor.
But even at a more generous price (the deal was termed "slightly ambitious" by one investor), this trade could not have gone through in current market conditions given dwindling investor appetite for lower-rated credit, say sources from syndicate desks not involved in the deal.
Meanwhile Hang Seng Bank, a local Hong Kong subsidiary of HSBC, issued a $300 million lower tier-two Reg-S 10-year non-call five FRN, closing with a coupon of 25bp over three-month Libor. The deal, marketed to yield 28bp over Libor, priced at a discount to par at 99.868, to yield 28bp over Libor. The transaction, rated Aa2 stable/ AA-, attracted a $450 million order book through sole bookrunner HSBC.
Described as cheap by investors, the deal was likely priced at reassuring levels thanks to the volatile conditions. The structure of the deal, a floating rate note designed to insulate bondholders from market movements, combined with the good quality of the credit, allowed the trade to go through. ôDespite the choppy market, this is a defensive instrument, a rare name, and a safe place to put cash in current market conditions,ö says one source.
The deal includes a step-up of 50bp if not called.
In terms of geographic split, 55% of the bonds sold to Europe, 23% to Singapore, 22% to Hong Kong and 1% to other. 40% of the bonds were allocated to banks, 58% to fund managers and 2% to other. A total of 24 accounts participated in the transaction.
In terms of comparables, bankers quoted Hang SengÆs 2011 FRN which is currently bid at 27bp over Libor, while DBS 2024s (5.125%) is currently trading at 26bp over Libor.
The bank is 61%-held by HSBC.
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