AMERICAN Express Bank plans to issue $1 billion through a floating-rate certificate of deposit (FRCD) and will apply for access to the liquidity adjustment facility (LAF) operated by the Hong Kong Monetary Authority.
It would be the third United States-based bank to make use of the LAF. Bank of America (Asia) and Merrill Lynch have $2.5 billion in LAF-eligible securities.
Standard Chartered Capital Markets and J.P. Morgan have won the mandate for the American Express deal.
Bankers predicted the issue would win an A2 rating from Moody's Investors Service which would secure it LAF eligibility. The maturity is likely to be three years.
The deal was discussed last year but was understood to have been delayed by a debate on whether the issue documentation should cover the future ownership of the bank.
LAF eligibility allows holders to engage in repurchase agreements with the monetary authority.
This means they can sell the securities to the authority after agreeing to buy them back at an agreed price and date, allowing the investor more flexibility in managing liquidity and giving the authority a useful tool for fine-tuning the market.