HK Land expands loan 33pc on high underwriter interest

Sean Kennedy

HONGKONG Land said yesterday its new 10-year exchangeable loan facility was being increased by 33 per cent to $2 billion after meeting strong interest from underwriters.

Hongkong Land is an infrequent borrower and has good security in the Landmark building in Central, and these qualities should underpin the deal, which is being arranged by Societe Generale Asia.

The market was also receptive to Hongkong Land as a landlord rather than another developer, bankers said.

Hongkong Land finance director Ian Durant said: 'The underwriting group comprises prime international banks with a strong presence in Asia. We are delighted that their enthusiastic response has allowed us to increase the facility.' Other underwriters are Chemical Securities Asia, Jardine Fleming, Mitsubishi Bank, Sumitomo Bank, West LB and co-arranger ABN-AMRO.

Mr Durant said the proceeds of the deal would be used for general corporate funding and to lengthen the company's debt maturity profile.

Syndication should start shortly.

Under the terms of the exchangeable option, lenders who opt to exchange their transferable loan certificates for short-term advance certificates receive only 25 basis points (0.25 percentage points), 55 basis points (0.6 percentage points) lower than the 10-year coupon.

The exchangeable option is exercisable three years from the draw-down of the deal, and annually thereafter.

Earlier this year, Sun Hung Kai did a similar deal for $2.05 billion for 10 years. That deal was also arranged by Societe Generale Asia.

Bankers said last week that Hongkong Land's rarity in the market should push the deal along.

'How many chances do you get to lend to a group like this?' one asked.