TRIPLE-A rated Bayerische Landesbank wants to get involved in the Asian capital market and plans a dragon issue of up to US$500 million, said Gerold Brandt, of the bank's board of management. The bank, one of the largest issuers of its own bonds, expects to issue more than 40 billion marks (about HK$203.8 billion) in new securities in 1994. It will be its first dragon. Mr Brandt said the bank would wait until after the Federal Reserve Open Market Committee's meeting this week, but admitted that announcing a dragon put it under pressure to produce an issue for the market. 'You put yourself under pressure but you can never put the market under pressure,' he said. 'We are between a rock and a hard place.' The bank would probably issue a record-sized bond; previous US dollar dragon issues tended to be for about $250 million to $300 million. 'But $300 million for a bank of our calibre is not very magnificent, so depending on the reaction of the market it could be $300 million to $500 million,' Mr Brandt said. The issue would probably be in the region of four to five years, which seemed to be the territory's favoured maturity, he said. The bank planned to emphasise the Asian nature of the deal. 'You might call it a dragon or you might call it an Asian dollar targeted bond,' he said. US dollars represent 28 per cent of its international bonds, ahead of Deutsche marks on 17 per cent and Canadian dollars on 13 per cent. It would be priced in Hong Kong, listed in Hong Kong, placed in Hong Kong and traded in Hong Kong, he said. 'If we do it, we do it here,' Mr Brandt said, adding that he did not want Bayerische's deal to follow the pattern of some earlier dragons that never stayed in Hong Kong. 'The dragon flew home again,' he said, in a reference to the amount of dragon paper ending up back in Europe. 'It flew to Europe and that is what we would not like to see.' The deal will be arranged by Lehman Brothers. , which has dominated the US dollar dragon market in the territory since the instrument's inception in November 1991. Bayerische has also been awarded a mandate for a deal by Hongkong Telecom, according to Volker Stoeckel, senior vice-president and general manager with the bank. Mr Stoeckel declined to give details.
