Bank of East Asia

Bank of East Asia bond sale raises record HK$5b

PUBLISHED : Thursday, 26 April, 2007, 12:00am
UPDATED : Thursday, 26 April, 2007, 12:00am

Bank of East Asia, the third-largest publicly traded lender in Hong Kong, has raised HK$5.1 billion from the largest investment-grade local currency corporate bond sale, market sources said.

The sale could give a boost to the Hong Kong dollar-denominated bond market, which has been driven mainly by government-backed firms such as the Airport Authority and the Hong Kong Mortgage Corp.

Bank of East Asia's latest deal represents about 30 per cent of the HK$17.8 billion worth of local currency bonds issued so far this year, up 16 per cent from a year ago, according to Thomson Financial.

Total sales were HK$74.2 billion last year, an increase of 24 per cent from 2005, Thomson said.

The lender's sale broke the record of HK$3.6 billion in a deal by Link Real Estate Investment Trust, the largest property trust in the world, in July last year. Other major deals included Hang Seng Bank, which raised HK$2.5 billion in June 2005, and HK$1.7 billion worth of bonds from Citigroup of the United States in November last year.

Bank of East Asia's one-year bond was priced to yield 4.45 per cent and matures on April 28 next year. Proceeds would go towards general corporate purposes. BNP Paribas organised the sale.

Local banks and insurance companies were the biggest buyers, a source said.

The bond refinances a one-year, HK$3 billion bond the bank sold last year. About 66 per cent of that debt, or HK$2 billion, matured in February. Standard & Poor's rates it A-minus, four steps above the non-investment grade.

The bond sale came as Bank of East Asia said yesterday it would pay HK$1.86 billion to increase its stake in Affin Holdings, a Malaysian financial services group, to 25 per cent from 4 per cent.

A larger stake in Affin could help Bank of East Asia tap the tightly controlled Malaysian market and gain expertise on Islamic banking services, chairman David Li Kwok-po said this month.

The deal is subject to the approval of Affin's shareholders and regulatory officials in Malaysia and Hong Kong.

Shares in Bank of East Asia closed unchanged yesterday at HK$48.20.