Citic proves it's no ITIC

The BBB-/Baa2-rated deal has been the first this year to test the true depth and strength of demand for Hong Kong and China credits. Recently, some analysts have started to predict that high grade Hong Kong could soon be pushed through the 100bp mark by asset hungry Asian investors. It would be hardly surprising then, to conversely discover that US investors were worried that a ‘Citic’ might unduly benefit from geographically-driven spread tightening which its stand-alone fundamentals did not deserve.

The 10-year deal that closed last night (Thursday) in New York, however, seemed to show that those international accounts which had done their credit work, were still prepared to buy in small size. Led by HSBC and Merrill Lynch, an issue for Citic Pacific Finance 2001 was priced at 99.655% with a coupon of 7.625% to yield 7.675%, or 228bp over Treasuries.