Hong Kong blue-chip electricity company China Light and Power sent out a request for proposals to banks for a benchmark bond during the weekend, according to a source. Submissions are due this week and a shortlist should be out by next week, with the beauty parade expected next week as well.
As China Light and Power is an investment-grade name, the fees are expected to be thin — a $300 million 10-year bond issued in July 2011 by its holding company, CLP Power, was said to pay around 15bp to 25bp. Deutsche Bank, HSBC, Royal Bank of Scotland and Standard Chartered were the arrangers. CLP Power’s bond, which was rated A1 by Moody’s and A by Standard & Power’s, paid a coupon of 4.75% for the bonds, which were issued under its medium-term note programme.
In addition to fees, however, other factors such as lending relationships are expected to play a role in the mandate. “A lot of Hong Kong blue-chip mandates are based on a couple of factors — league tables, the historic relationship and day-to-day servicing, not just fees,” said one source.
China Light and Power was founded by the Kadoorie family and its chairman is Michael Kadoorie, the son of Lawrence Kadoorie. In recent years, the company has been expanding out of Hong Kong into India, mainland China and Australia.
Hong Kong companies have been especially active in the dollar bond market this year — as banks have cut back on lending and as rates hover near all-time lows. So far this year, Hong Kong companies have raised a record amount of $16.5 billion from dollar bonds, according to Dealogic, a big spike compared to the $2.1 billion raised during the same period last year.