Henderson, SHKP close in on hefty loan deals

PUBLISHED : Friday, 03 January, 2014, 1:55am
UPDATED : Friday, 03 January, 2014, 1:55am

Henderson Land and Sun Hung Kai Properties (SHKP) are close to finalising syndicated funding deals - both for HK$13.8 billion - that confirm the cost of loan capital is dropping quickly for Hong Kong's biggest corporate names.

Henderson Land is set to close its loan on Monday. The deal is split into a four-year tranche and a five-year one, with pricing on the four-year set at 135 basis points above the Hong Kong interbank offered rate, all in, for the top-level banks. Pricing for the five-year tranche is 125 basis points above Hibor, all in.

Nineteen banks are in the Henderson syndicate, of which no fewer than 17 are mandated lead arrangers.

SHKP is expected to close its syndicated loan this month. Pricing on the 51/2-year funding, which started as a HK$5 billion transaction but was increased on strong demand, is coming in at 130 basis points over Hibor. That is the tightest pricing seen for any loan for a Hong Kong blue chip in several years, bankers close to the issuer said.

Twelve mandated lead arrangers are working on the SHKP loan, which was recently launched into general syndication.

The falling pricing points to improved liquidity in the city's syndicated loan market, which generated US$79.2 billion in loan transactions last year, about double the volume seen in 2012, according to Thomson Reuters.

An influx of capital is pushing down loan pricing. All things being equal, Hong Kong blue chips would have paid about 200 basis points over Hibor for a three-year loan in 2012. The same borrower could get five-year money for about 135 basis points over Hibor in syndicated markets last year, and bankers expect that spread to tighten this year.