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Sun Hung Kai Properties, a Hong Kong-listed developer, last night priced a $500 million five-year bond at Treasuries plus 245bp, at the tight end of the Treasuries plus 245bp to 250bp guidance.
Standard Chartered acted as sole bookrunner, which is a rare role in Asia’s bond market these days. The notes pay a 3.5% coupon and were reoffered at 99.901 to yield 3.522%.
Sun Hung Kai announced the deal at around 11am on Monday as a benchmark-size offer and told investors it would not exceed $500 million. Standard Chartered had quietly sounded out investors on Thursday and Friday, and already found a few anchor orders for about half the entire deal size, which helped it to cover the books within an hour of opening them.
StanChart closed the books early, leaving London investors with only about an hour to look at the deal. In the end, 103 accounts placed orders worth $1.5 billion amid a pick-up in general investor sentiment. In Hong Kong, the Hang Seng Index closed up 4.1%.
According to one source, HSBC was also slated to be on the deal at one point but dropped out for unknown reasons, leaving some to claim there was a fee dispute. Others dispute this and say the bank was not involved for other reasons.
Standard Chartered, which has a lending relationship with Sun Hung Kai, was also rumoured to have underwritten the deal, but that was denied. Bank of East Asia, Hang Seng Bank and HSBC also lend to Sun Hung Kai.
In terms of distribution of the bonds, the bulk went to Asian investors. Hong Kong/China investors were allocated 60%, Singapore investors 30%, and European and Middle Eastern investors 10%. By investor type, funds and asset managers were allocated 70%, insurers 15%, private banks 7%, central banks and banks the rest.
Sun Hung Kai had tapped the bond market with a $300 million 10-year bond back in March 2007 via Citigroup and HSBC. Those bonds were quoted at Treasuries plus 220bp. The new Sun Hung Kai November 2016s, which were shorter in duration by about five months, came at Treasuries plus 245bp and, after taking into account the shorter duration, Sun Hung Kai was said to have paid a new issue premium of about 25bp for its new bond maturing November 2, 2016.
The bonds were issued off Sun Hung Kai’s $4 billion medium-term note programme. Sun Hung Kai is a Hong Kong based property development and leasing company, with a well-recognised brand and strong market position in Hong Kong. It has a market cap of HK$266.5 billion ($34 billion).
The issue is rated A1/A+ by Moody’s and Standard & Poor’s, with stable outlooks from both rating agencies. According to S&P, Sun Hung Kai’s rating reflects steady growth in the company’s high quality investment property portfolio, both in Hong Kong and China.
Away from Sun Hung Kai, a number of Korean borrowers such as Korea Finance Corp, Shinhan Bank and Hana Bank are said to be waiting to tap the bond market, following Korea National Oil Corp’s success last week.
