Hutchison to raise US$1b in bond issue
Hutchison Whampoa plans to raise at least US$1 billion from a bond issue to lower its funding costs amid the current low interest rate environment, sources close to the transaction said.
The port-to-telecommunications conglomerate hired Barclays Capital, HSBC Holdings and Deutsche Bank to help arrange the sale.
The bond issue will be split into two tranches. One portion is a six-year note marketed with a yield of 235 basis points over five-year US treasuries, according to a sales document. The other is a 10-year bond issue at 240 basis points above 10-year treasuries.
The offering was launched early yesterday and attracted more than US$5 billion in subscriptions from institutional investors - four times oversubscribed - in six hours. The arrangers expected to close the deal by the New York opening yesterday, sources said.
'Everybody knows them well, and therefore it's not necessary to do any marketing,' said a source familiar with the bond sale. 'The company tapped the market at the right time, with a fair borrowing cost.
'The firm is an opportunist. It bought back the short bond and sold longer bonds with similar costs so it is able to build a healthy balance sheet.'
Hutchison, a frequent issuer in the region's debt market, tapped the market five months ago for US$1.5 billion with a yield of 475 basis points over US treasuries on a 10-year bond offering.
The borrowing cost of the latest bond sale was almost half of the one in April, as a result of a recovery in the credit markets.
Fitch said the net proceeds from the issue are expected to be used primarily for refinancing existing debt.
Moody's Investors Service assigned an 'A3' rating to the note issuance, while Fitch assigned an 'A-minus' rating.
Yield of the 10-year tranche as a premium to US treasuries is: 2.4%