The Hong Kong and Shanghai Banking Corporation (HSBC) has become Asia's first domestic currency issuer to market and syndicate a debt offering on-line. A HK$2 billion Floating Rate Certificate of Deposit (FRCD) launched yesterday also represented the first test of the bank's new global electronic syndication platform in Asia.
Some 70 to 80 institutional investors and banks have been given access to the new site where they will find syndication invitation letters, terms and conditions, a summary of HSBC's HK$40 billion CD program, fixed income credit research and the most recent financial highlights of the bank.
Says Bryan Pascoe, HSBC's head of debt syndication, "users have all the necessary information in one place and can electronically signal indications of interest in the deal."
Bankers have long argued that the internet's greatest potential value for the bond market lies in its capability to provide an on-line library and to streamline the syndication process by making the faxing out of hundreds of invitation letters unnecessary.
However, final confirmation of acceptance still has to be done manually as a written signature is legally required for documentation purposes. So too, the bank still intends to maintain an excel spreedsheet compiling indications of interest and will email confirmation of allocations in parallel with the more conventional method of phone and fax.
"All processes will run in parallel for some time until users of the site are fully familiar with this new offering method," explains Pascoe.
To date, the Kowloon Canton Railway Corporation (KCRC), Development Bank of Singapore (DBS) and Singapore Power have all made varied use of the internet when launching dollar-denominated deals this year. Both the KCRC and DBS, for example, marketed deals on-line, with the Singaporean bank also able to take electronic orders over lead managers Goldman Sachs' and Morgan Stanley Dean Witter's web sites.
Singapore Power, meanwhile, incorporated some on-line distribution via bookrunner JP Morgan's SynDirect system when it launched a debut international bond offering in mid-April.
HSBC's three year deal carries an A3 rating and has been priced at par with a coupon of 15bp over three month Hibor. Responses are due by June 9, with co-leads being offered fees of 24bp on books of HK$200 million and above, senior managers 21bp on books of HK$100 million to HK$199 million and managers 15bp on books of HK$50 million to HK$99 million.
