Wharf last night finalised the pricing of its massive US$575 million asset-backed bond, with analysts saying the conglomerate had paid a substantial premium over market rates to secure the much-needed funding. Analysts said that the pricing was expensive, particularly for the Hong Kong dollar denominated tranches, but tolerable for cash-strapped Wharf. The deal was split into a variety of US dollar and HK dollar denominated, fixed and floating rate portions with varying ratings. The deal included a US$230 million floating rate, triple-A rated tranche priced at 125 basis points over the three-month London Interbank Offered Rate. There was also a US$70 million double-A rated, floating rate tranche priced at 225 basis points over Libor, and single-A floating US$54.05 million tranche priced at 400 basis points over Libor. A single-A, HK$260 million floating rate tranche was priced at 450 basis points over Hibor. A double-A, HK$67.5 million, fixed-rate tranche was priced at 10.32 per cent, payable quarterly. Credit Lyonnais Capital Markets head of research Chris Tinker said that Wharf was not getting cheap funding. 'This is not a market that needs the biggest-ever asset-backed bond outside Japan at the moment. Investor appetite is limited,' he said. Analysts said Wharf's securitized bond was also likely to be more expensive than comparable asset-backed bonds because it was based on the commercial rentals of Harbour City, Wharf's office and shopping complex in Tsim Sha Tsui, rather than diverse assets. Moody's Investors Service yesterday put Wharf's unsecured debt securities under review for possible downgrade. The ratings agency was also concerned Hong Kong's tough environment would hurt Wharf. '. . . by encumbering some of Wharf's most valuable assets, this transaction may impair the company's financial flexibility, in addition to subordinating unsecured creditors,' Moody's said.