IFC Development, one of the biggest commercial complexes in Hong Kong, closed a $500 million debut bond as it turned to debt investors to refinance a loan. The company is one among many that have opted to tap the bond market for the first time this year, taking advantage of cheap financing for longer tenors and the opportunity to diversify funding sources.
The company opted to issue a six-year bond — an odd tenor in bond markets — as it offered the most competitive level upon swapping back to a floating rate note. According to a source, it had considered five- and six-and-a-half-year bonds as well.
The initial guidance for the bonds, which are senior and unsecured, was 180bp over five-year US Treasuries. This was revised to Treasuries plus 170bp, which was where the bonds priced. According to a source, this swapped back to about Libor plus 130bp, which was more competitive than the loan pricing.
IFC is located in the heart of Hong Kong’s Central district and includes two office buildings, a shopping mall, a cinema and a Four Seasons Hotel. It is a Hong Kong landmark and backed by Hong Kong’s blue-chip companies. Sun Hung Kai Properties owns 50%, Henderson Land owns 34.2% and Towngas holds 15.8%.
The deal attracted a book of about $1.6 billion from more than 100 accounts. Asian investors were allocated 92% and the rest went to European investors. Fund managers were allocated 45%, banks 27%, insurance and pension 22% and other investors 6%.
The issuer was IFC Development (Corporate Treasury) and the guarantor was IFC Development. The issue is rated A2 by Moody’s and A by Standard & Poor’s. The coupon was 2.375% and the notes reoffered at 99.197 to yield 2.52%. There is a change of control put at 101. Bank of China, HSBC and Standard Chartered were global coordinators and bookrunners. Citi, DBS, Goldman Sachs, Mizuho, Morgan Stanley, OCBC and UOB were also bookrunners. The three global coordinators and some of the bookrunners such as Mizuho and UOB were lenders.