‘Standard’ Hutch bond deal raises $1.5 billion

But in a departure from its usual style, Hutchison Whampoa adds Bank of America Merrill Lynch and Citi as bookrunners alongside house banks Goldman Sachs and HSBC.

Hutchison Whampoa, controlled by Hong Kong tycoon Li Ka-shing, hit the market running early this week with a $1.5 billion dual-tranche bond. The deal was announced on Monday, beating a heavy supply pipeline of Asian dollar bonds.

No roadshows were held and the deal was slickly executed — as is usually the case with a seasoned borrower such as Hutch. The Hong Kong-based conglomerate mandated banks last week and, by the weekend, was ready to go, ahead of the US presidential elections.

“It was a standard Hutch operation,” said one banker. “They were prepared. They decided to go ahead of the US elections and got ahead of heavy Asian supply. Already this morning, we have seen Baidu announce roadshows and Indonesia come out with a global sukuk.”

The $1 billion five-year tranche priced at Treasuries plus 135bp, at the tight end of the Treasuries plus 135bp to 140bp final guidance and about 20bp inside of initial guidance. The $500 million 10-year tranche priced at Treasuries plus 162.5bp, at the tight end of the Treasuries plus 162.5bp to 167.5bp final guidance and 17.5bp inside the initial guidance.

However, in a change from the usual Hutch transaction, the company included Bank of America Merrill Lynch and Citi as bookrunners, alongside Goldman Sachs and HSBC, which have historically been house bankers and arranged all the company’s dollar bond deals this year. It was the first time Citi has been on a Hutch deal since 2003. However, it remains to be seen if Hutch is expanding its house banker list or if this is a one-off rotation.

The deal received grudging praise from rivals though some were expecting a bigger print. “I think it was a good deal for Hutch,” said one banker away from the deal. “But I was surprised about the size. I thought they would tap the market for a larger size.”

Hutch has been actively tapping the debt markets this year. It has raised about $7.5 billion so far (including its latest deal) through senior debt, a $1 billion hybrid and a $2.5 billion-equivalent through a euro-denominated bond.

The bonds have performed in secondary markets. The 2017s were bid at Treasuries plus 135bp, flat to the issue spread and the 2022s were bid at Treasuries plus 160bp, 2.5bp inside the 162.5bp issue spread.

The five-year tranche attracted a $4 billion book with 245 orders. Asian investors were allocated 38%, European investors 30% and US investors 32%. Fund managers were allocated 62%, banks 16%, agency, pension funds and insurers 16%, private banks 4% and other investors 2%.

The 10-year tranche attracted more than $3 billion with 240 orders. Asian investors were allocated 45%, European investors 25% and US investors 30%. Fund managers were allocated 64%; agencies, pension funds and insurers 19%; private banks 8%; banks 7%; and other investors 2%.

Hutch has interests in ports, telecommunication, property, retail, infrastructure and energy.

The coupon for the five-year bonds was fixed at 2% and the notes reoffered at 99.768 to yield 2.049%. The coupon for the 10-year bonds was fixed at 3.25% and the notes reoffered at 99.484 to yield 3.311%.

Among the deals in the pipeline is Hong Kong developer Lai Sun Development, which concluded roadshows on Tuesday and is expected to tap the market this week. BNP Paribas, HSBC and Standard Chartered are the arrangers. Elsewhere, Chinese internet company Baidu has mandated Goldman Sachs and J.P. Morgan for a potential dollar bond. Roadshows to Asia, Europe and the US start today.

The Republic of Indonesia has mandated Deutsche Bank, HSBC and Standard Chartered for its upcoming sukuk. Roadshows will focus on the Middle East and will wrap up by the middle of next week. Indonesia is expected to issue the bonds off its newly established $3 billion programme.

¬ Haymarket Media Limited. All rights reserved.
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