China Merchants Holdings yesterday morning priced a Rmb3 billion ($463 million) dual-tranche dim sum bond. The offshore renminbi market has stayed open even as international worries helped close the dollar market, but dim sum bonds are now having a harder time as well.
The deal attracted a total orderbook of Rmb3.6 billion, which fell short of the Rmb4 billion deal size that was initially talked about. The company was also considering a benchmark dollar bond — either as a replacement for the dim sum bond or in addition to it — but eventually settled on printing only the dim sum portion.
The notes were issued by Rainbow Days and China Merchants Holdings (Hong Kong) was the guarantor.
The Rmb1.4 billion three-year tranche priced at a yield of 2%, at the wide end of the 1.80% to 2% guidance, while the Rmb1.6 billion five-year tranche priced to yield 3%, at the wide end of the 2.8% to 3% guidance.
Bank of China, Deutsche Bank and Standard Chartered were global-coordinators and joint bookrunners for the bond. ICBC Asia, which was a co-manager, was added as a bookrunner at the eleventh hour, thanks in part to a big order it placed.
In terms of distribution, banks bought a big chunk of both tranches, particularly the short-dated bond, where they made up 87% of demand. Asset managers bought 10% of the three-year and private banks 3%. Banks bought 58% of the five-year tranche, asset managers 40% and private banks 2%.
The company had held investor meetings in Singapore, Hong Kong and London, but in the end it distributed the bonds straight to accounts in Asia. The bonds were unrated and some felt that this may have led to the lack of participation from investors in London.
Hong Kong investors bought 76% and Singapore investors the remaining 24% of the three-year tranche. On the five-year, Hong Kong investors bought 83% and Singapore investors bought 17%.
Both notes were issued at par. The three-year bonds mature on June 30, 2014 and the five-year bonds mature on June 30, 2016.
Elsewhere in the market, according to a source, the big Chinese banks, including Bank of China, China Construction Bank, ICBC and Bank of Communications are all seeking approvals to issue offshore renminbi bonds and have sent out requests for proposals to banks. The issuance is expected to hit the market after the summer.
Elsewhere, Malaysia started marketing a dual-tranche sukuk benchmark yesterday. CIMB, Citi, HSBC and Maybank are joint arrangers.
There is a two-team roadshow, with the first team in Hong Kong yesterday, Singapore today, and New York on Monday. The second team was in Dubai and Abu Dhabi yesterday, London today, Riyadh on Sunday and New York on Monday. The dollar benchmark is expected to have a tenor of five or 10 years, or both.