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Chartered launches another FRCD

Sean Kennedy

STANDARD Chartered Bank has launched a $1.6 billion floating-rate certificate of deposit (FRCD), hard on the heels of its successful $1.2 billion issue signed only four months ago.

Like the earlier deal, which was doubled from a planned issue size of $600 million, yesterday's issue matures in 1999.

Unlike that deal, Standard Chartered is seeking a rating for its latest borrowing. 'This specific issue will be rated by Moody's Investors Service,' said Philip Cracknell, a director of Standard Chartered Asia, which arranged the deal.

A rating is one of the three requirements of the Hong Kong Monetary Authority for an issue to qualify for access to the liquidity adjustment facility (LAF). This allows holders of the paper to access the facility operated by the authority.

The other requirements are that the issue must have at least two market-makers on a daily basis and that the Central Money-markets Unit must be custodian.

'It's quite expensive getting a rating, but it seems a lot of banks we've spoken to today are very attracted because the issue has access to the LAF,' Mr Cracknell said.

Hongkong Bank's recent $3.2 billion FRCD also qualified for LAF access, while Wharf (Holdings) is seeking a rating for its $1.5 billion floating-rate note issue launched two weeks ago.

Despite reports that the market is being swamped with floating-rate syndications because of fears the port and airport development scheme will drain Hong Kong of cash, a banker observing yesterday's deal, said it was merely matching long-term assets with long-term liabilities.

'It's the prudent move one would do in any country,' he said.

Standard Chartered had a substantial amount of money outstanding in longer-term loans, particularly mortgages, although pre-payment tended to shorten mortgage periods, he said.

'But the mortgages' potential maturity is quite long. A lot of the funding from [Standard Chartered] branches is quite short-term, so it's locking in longer maturity funding now,' he said.

Issue price was at par and the coupon was three-month HIBOR (Hong Kong interbank offered rate) plus 35 basis points, Standard Chartered said.

Expanded lead managers paying $100 million or more are eligible for flat fees of 50 basis points, co-lead managers get 37.5 basis points for $60 million to $90 million, and managers get 25 basis points for $30 million to $50 million. This gives all-in yields of 45, 42.5 and 40 basis points, respectively.

Deposit date is expected to be December 9, Standard Chartered said, and the maturity will be five years from the deposit date.

The deal was fully underwritten by Standard Chartered Asia, and by co-arrangers WestLB, Bayerische Landesbank, Goldman Sachs (Asia), LTCB Asia, Societe Generale Asia and Union Bank of Switzerland.

Standard Chartered Asia and Union Bank of Switzerland will be market-makers for the deal on a daily basis.