• Sat
  • Dec 20, 2014
  • Updated: 4:00pm

Wing Hang to issue US$300m bonds for mainland acquisitions

PUBLISHED : Wednesday, 11 April, 2007, 12:00am
UPDATED : Wednesday, 11 April, 2007, 12:00am
 

Wing Hang Bank, a local family-run bank, plans to raise as much as US$300 million from a perpetual bond sale to strengthen its capital reserve for potential acquisitions and expansion in the mainland banking sector, people familiar with the transaction said.


'The actual size is yet to be fixed but the amount will not be less than US$200 million, given the strong creditability of the issuer,' said a source close to the deal.


The upper tier II notes will feature an option for the bank to redeem the bonds after the 10th year. Wing Hang has mandated UBS, Citigroup and HSBC to help in the bond sale.


Investor presentations started in Hong Kong yesterday and will move to Singapore today. Final pricing will be determined by the end of this week or early next week, according to a sale document obtained by fund managers.


'The coupon rate is likely to be set at around 6 per cent to 6.25 per cent, which is similar to what other local lenders paid for a bond offering recently,' said one fund manager who was invited to place orders on the offering.


Bank of East Asia, controlled by tycoon David Li Kwok-po and his family, raised GBP300 million (HK$4.62 billion) by selling a sterling-denominated perpetual bond in mid-March. The bond carries a semi-annual coupon of 6.125 per cent. Dah Sing Bank, a smaller lender in the city, sold a US$200 million perpetual subordinated bond early this year to strengthen its tier II capital and fund its 17 per cent investment in Chongqing Commercial Bank.


Wing Hang, to increase its presence in a fiercely competitive local consumer lending market, early this year paid HK$1.4 billion for Inchroy Credit Corp, a consumer lending firm.


'We estimate that at completion, including funding benefits and cost synergies, Wing Hang would see a 4 to 6 per cent earnings enhancement in 2007 and 2008 from the Inchroy acquisition,' a Credit Suisse research report said.


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