Citic Ka Wah raises $300 million

Hong Kong bank completes debut international senior bond deal.

Joint lead managers HSBC and UBS priced a $300 million senior fixed rate bond issue for Citic Ka Wah Bank yesterday (November 10). The key achievement of the five-year deal was its pricing through the more established and liquid Korean curve.

Pricing came at 99.582% on a coupon of 4.25% to yield 4.344%. This equates to 82bp over Treasuries or 36bp over Libor. Fees were 20bp.

Given how rarely Hong Kong banks access the senior bond market, the main comparables came from Korea. Citic Ka Wah has a Baa2/BBB rating (Fitch), while Woori Bank has a one-notch higher rating from Moody's of Baa1.

The latter bank has a September 2008 bond outstanding, which was bid yesterday at 39bp over Libor. Given that the curve is worth about 2bp to 3bp, this would price a new Woori five-year at about 42bp over Libor.

Tight pricing meant the order book was not that heavily oversubscribed - 1.5 times. About 40 investors participated of which 39% came from Hong Kong, 20% from China, 34% from Singapore, 6% from Korea and 1% from Europe.

By investor type, banks took 79%, asset managers 11%, corporates 6%, insurance 2% and retail 25.