Over the past week, three of the four deals expected to come to market were held up as both bond and equity markets continued their weak performance - with investors remaining uncertain about further rate hikes in the US and commodity prices. National Agricultural Cooperative Federation (NACF), Megaworld and Matahari all opted to wait for debt markets to settle down before setting terms for pricing.
HSBC was sole lead on the Dah Sing bond and marketed the 10-year non-call five floating rate transaction to investors via a series of one-on-one meetings in Hong Kong and Singapore last week, with an initial guidance of 78bp over three-month Libor.
The Baa1/BBB+(Fitch) rated deal priced at 99.87% with a coupon of 75bp over Libor, a yield of 78bp over.
The deal closed slightly oversubscribed, with a total order book of $160 million and with 24 accounts allocated paper. Asian-based investors made up 22 of the 24 accounts.
As a truly market-driven deal, it indicates an interesting about face in the borrower's subordinated funding tactics.
In previous deals, Dah Sing had been more inclined to fund on a bought deal basis. Last year the bank sold a lower-tier 2 sub deal via Deutsche Bank due 2015, with a 2010 call option. As well as a 12-year lower tier 2 subordinated deal, callable in 2012 via Standard Chartered last August. The respective lead managers are reckoned to have kept bonds on their books in both trades.
Funds from the deal will be used to strengthen Dah SingÆs capital base following the redemption in March of $125 million in subordinated paper.
At the break on Friday the new deal, bolstered by a stronger underlying market, was trading slightly up and was quoted at a bid offer of 76bp to 74bp over Libor.
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