Broker Haitong raises US$600m in bond issue

PUBLISHED : Thursday, 04 September, 2014, 9:52am
UPDATED : Friday, 05 September, 2014, 12:43am

Haitong International Securities, the overseas unit of the mainland's second-largest brokerage, has raised US$600 million in a five-year bond deal that marks its second fundraising in six months.

The fixed-income product, paying an annual coupon rate of 3.99 per cent, was well received by Hong Kong and Singapore investors, with strong demand driving an order book worth US$4.5 billion from more than 250 institutional investors at the end of marketing.

"The strong demand has brought the final yield to 4.257 per cent, down from an initial price guidance of 10-year US government yield plus 200 basis points (4.4 per cent)," a banker on the transaction told the South China Morning Post.

The feedback from investors surprised on the upside, thanks to our marketing

"The feedback from investors surprised on the upside, thanks to our marketing efforts to position the company as a Hong Kong-based financial institution with exposure to overseas markets."

Hong Kong investors represented 45 per cent of the deal, followed by Singaporeans with 32 per cent and Europeans with 11 per cent.

Banks and private banks were most active buyers, representing 58 per cent of the overall offering, according to a term sheet.

The rapidly expanding broker, which launched its first overseas unit in Singapore in January, has pinned high hopes on margin financing business and fixed-income, currencies and commodities.

Mainland brokers have been urged to diversify their almost identical operating models, with Beijing eager to modernise an equity-centric financial market as liberalisation of the yuan and capital account gradually gather pace.

Citic Securities, the mainland's largest brokerage by assets, acquired pan-Asian brokerage CLSA last year in the first major overseas acquisition by a mainland brokerage.

Haitong also raised HK$3 billion in a rights offering in April after raising more than HK$5 billion last year, including a HK$1.2 billing rights issue in April last year, a combined HK$1 billion in two convertible bonds in July and October and a revolving syndicated loan worth HK$3 billion.

The net proceeds of the latest bond would be used for general corporate purposes, the firm said in a filing with the Hong Kong stock exchange yesterday.

Haitong International and Deutsche Bank were the managers for the bond deal.