Chexim scores a success

Policy bank attracts big order book.

The Export Import Bank of China (Chexim) exorcised the ghosts of 2004 yesterday (July 14) with a highly successful $1 billion 10-year fixed rate deal via BNP Paribas, Citigroup, HSBC and Merrill Lynch. Benefitting from a strong market tone, the group was able to attract an order book of $5.8 billion after a four-day bookbuild.

The deal was priced at 98.801% on a coupon of 4.875% to yield 5.029%. This equated to 85bp over Treasuries, or 42bp over Libor. Fees were 18bp.

The bank's outstanding July 2014 deal was said to have been trading at 76bp over Treasuries and 35bp over Libor at the time of pricing. The new deal has, therefore, priced at a couple of basis points above the old taking into account about 5bp on the curve.

Relative to the sovereign it has also come at pretty much the same premium it did in 2004. Then it priced at an 18bp premium, or 13bp after taking account of the curve. This time round, the PRC's 4.75% October 2013 deal was trading at 62bp over Treasuries and roughly 21bp over Libor. Bankers say this equates to an 11bp to 12bp pick-up on a like-for-like basis.

Chexim is likely to have been particularly pleased with the success of the new deal as its 2004 benchmark offering hit a brick wall with investors. It came after a period of heavy issuance by sovereign and quasi-sovereign Asian borrowers and at a time when the markets appeared to be shutting early for the summer. It was consequently downsized from $1 billion to $750 million in order to hit Chexim's pricing targets.

This year there has been little issuance by Asian quasi-sovereigns and investors have recently re-discovered their enthusiasm after a three to four month fallow period. This has enabled Chexim to allocate the deal to a wider audience than 2004, particularly in Europe where it is said to have had a 100% hit rate.

In total, 234 investors placed orders. The deal has a geographical split of 38% US, 37% Asia and 25% Europe. In 2004 only 7% went to Europe and 66% to Asia.

By investor type, asset managers have taken 50%, banks 44%, corporates 4% and central banks 2%.

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