Hang Seng Bank, the sixth-largest Hong Kong-listed lender by market capitalisation, plans to sell US dollar-denominated bonds to strengthen its tier-two capital, according to market sources.
The preliminary target on the 10-year subordinated bonds was about US$500 million, although the final size would depend on demand and market conditions, sources said.
The bonds are expected to carry a floating interest rate and the bank will have the option to redeem them after the fifth year. HSBC, Hang Seng Bank's parent, is the lead manager to arrange the deal.
Rating agencies Standard & Poor's and Moody's Investors Service yesterday assigned a preliminary rating 'A-plus' and 'Aa3' to the proposed bonds, respectively. The bank would begin marketing the bond sale in Hong Kong today, followed by Singapore on Monday, sources said.
A source said that usually the indicative price range would not be revealed until investor presentations started. For subordinated debts of similar ratings, the current price ranged between 20 to 30 basis points above the London interbank offered rate.
'The pricing for Hang Seng's issue may fall into this range or even a bit tighter as investors may fight for good quality assets under current volatile investment environment,' he said.