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Ben Kwok

Pacific Century CyberWorks is likely to scale back the size of its US$2.5 billion bond issue because of weak market sentiment, according to sources.

The offering of 10-year bonds, which would have been the largest held in Asia, could be cut by between US$500 million and US$1 billion, the sources said.

CyberWorks could announce the downsizing as soon as today.

The company has already dropped a plan to offer 30-year bonds along with the 10-year instruments.

Worries are growing among underwriters that demand for the bonds may not be as strong as earlier anticipated.

'Bond investors do not like the telecoms industry, and many hold a pessimistic view on Asia, too,' one source said.

Chairman Richard Li Tzar-kai indicated on Wednesday that the size of the issue might not be the expected US$2.5 billion, asserting that the company 'will balance the total issue size against interest rate' to give shareholders the best value.

By paying the 10-year bonds interest on the indicative US treasuries over 312.5 basis points, CyberWorks is paying roughly 100 basis points more than the rate of the US$4.7 billion refinancing package signed earlier this year.

Sources indicated CyberWorks had hoped to lengthen its interest payment schedule so as to enjoy more financial flexibility.

But with the indicative bonds terms, it would be better for the firm to trim down the bond size as 'opportunity costs became higher'.

Another source rejected the cut in the bond issue was related to investor demand.

Shares of CyberWorks were unchanged yesterday before a early morning sell-off drove the price to an historic low of HK$2.



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