Siam Commercial returns to market

Siam Commercial Bank returns to the international debt markets after almost a decade.
Siam Commercial Bank (SCB) recently entered the dollar-denominated debt markets with a $300 million three-year Reg-S FRN via sole lead Goldman Sachs. The leads were able to bring pricing tighter than initial guidance outlined on the back of an $800 million order book.

The deal marks the first time SCB has tapped the international debt markets since the Asian financial crisis and only the second time a Thai commercial bank has gone offshore since 1997, following last week's upsized $200 million hybrid tier 1 deal for Thai Military Bank.

The Baa1/BBB/BBB+ (Fitch) deal was initially marketed to investors at roadshows in Hong Kong, Singapore and London at 25bp over Libor. Final pricing came at par with a coupon of 23bp over.

The deal attracted around 20-plus accounts, oversubscribing the deal 2.33-times. Geographically, the deal was top heavy in Asia which accounted for 96% of the total book û 53% Singapore, 21% Hong Kong, 20% domestic, Taiwan and Korea accounted for 2%. The remaining 4% went to UK-based investors.

In terms of account type, bank managers took 59%, fund managers 21%, pension funds 13% and insurers 7%.

The deal was able to garner a lot of support during the roadshows, as investors become more familiar with the credit. Overall SCB has seen its fundamentals improve significantly over the past year - its interest income increased some 40% in the first quarter alone.

Additionally, investors were drawn to the deal's rarity factor. Industrial Bank of Korea's (IBK)$500 million FRN that was priced in mid-April was the probable benchmark. That deal priced at 27bp over Libor and has tightened slightly to around 25bp -26bp. Experts estimate that the IBK three year to five year curve to be worth around 5bp. However, as IBK carries a higher rating at A3/A-/A+ (Fitch), it should price markedly tighter than a Baa1/BBB/BBB+ credit.

The deal has managed to maintain a firm foothold at the 23bp level on the secondary markets. However, the market's liquidity has been down markedly thanks to regional holidays and secondary trading across the curve has been relatively flat.

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