Dah Sing Bank entered the international bond markets on Friday raising $300 million from a split fixed rate and FRN issue via HSBC. In doing so it became the third Hong Kong bank to access the US dollar market in as many months following a $400 million issue for ICBC in September and a $300 million issue for Citic Ka Wah Bank just over a week ago.
Baa1/A- (Fitch) rated Dah Sing priced $150 million of five-year fixed rate notes at 99.727% on a coupon of 4.125% to yield 71bp over Treasuries, 31bp over mid-swaps or 27bp over Libor.
It also priced $150 million of five-year floating rate notes at par to yield 29bp over Libor. Fees were undisclosed by the lead.
About 23 investors participated in the fixed rate tranche and 13 in the FRN tranche, with about three investors participating in both.
By investor type, 77% of the fixed rate tranche went to banks, 14% to asset managers, 5% insurance companies and 4% private banks and corporates. By geography, the book split 75% Hong Kong/China, 20% Singapore and 5% Japan. None of this tranche was asset-swapped.
The FRN had a split of 72% banks, 18% asset managers and 10% corporates. By geography, about 70% went to Hong Kong/China and 30% Singapore.
The clear pricing comparables are ICBC Asia and CKW, which straddle it on either side of the ratings divide. CKW has a Baa2/BBB (Fitch) rating and was bid on Friday at 37.5bp over Libor. This marks a slight widening from its 36bp launch price on November 10.
ICBC Asia, on the other hand, was trading at about 18bp over Libor and has an A2 rating from Moody's, two notches higher than Dah Sing and three notches higher than CKW. This means Dah Sing has priced almost mid-way between two, with a 2bp differential in favour of CKW's end.
In this respect, pricing was relatively aggressive given that CKW has weakened very slightly, high grade Asian spreads have been described as toppy and there are two notches between Dah Sing and ICBC. The latter has tightened considerably since early September when it launched a five-year deal at 40bp over Libor, some 22bp wider than it is today.