GE Capital raises HK$1b in US-backed bond sale

PUBLISHED : Thursday, 05 February, 2009, 12:00am
UPDATED : Thursday, 05 February, 2009, 12:00am

The finance arm of General Electric has raised HK$1 billion from the sale of bonds backed by the United States government, the first such sale in an Asian currency.

GE Capital Corp sold three-year, floating-rate notes at 0.2 percentage point above the three-month Hong Kong interbank offered rate, according to a term sheet. How the company intends to use the funds was not explained in the document.

The bonds will yield 1.15 per cent interest after Hibor, a benchmark lending rate set every morning by 20 banks in the city, was fixed at 0.95 per cent yesterday.

HSBC Holdings, Europe's largest bank, arranged the transaction.

The US, through its Federal Deposit Insurance Corp, along with a number of governments, pledged to support the sale of bank debt late last year when capital markets were in a tailspin. GE, which has technology, media and financial services units, joined the programme in November.

'Since government-guaranteed schemes came in October last year, there has been more distribution coming to Asian investors as the product gets broader, and this will probably be a continuing trend,' said a source, who expected Singapore to also become a destination for local-currency Asian bond sales.

Another market observer said: 'I think you'll see more of this, because there are a number of issuers that have benefited from government guarantees tapping markets around the globe to gain exposure to different pools of funds.'

Ratings agency Moody's Investors Service said on January 27 that it was considering cutting GE's Aaa long-term debt rating, the highest available, on concerns about the company's ability to sustain earnings. Such reviews usually take 90 days.

Companies including MTR Corp, China Construction Bank Corp and Italian bank Intesa Sanpaolo have raised HK$4.06 billion in Hong Kong-dollar-denominated debt so far this year, according to Bloomberg data. In the first quarter of last year, HK$5.66 billion was raised.