Swire readies new 10-year eurobond

Hong Kong conglomerate mandates HSBC and Morgan Stanley for new $350 million deal.
In a dual currency capital raising venture, Swire has mandated HSBC and Morgan Stanley to lead a proposed 10-year $350 million bond deal, following the completion of a Hong Kong dollar-denominated issue earlier this week.

The Reg-S deal is scheduled to kick-off roadshows in Asia and Europe next week.

HSBC, acting as sole lead priced a HK$1.8 billion ($232 million) seven-year fixed-rate issue for Swire Pacific MTN Financing. The notes, offered from SwireÆs existing $1.5 billion global MTN program, are fully guaranteed by parent Swire Pacific. That deal priced at par with a quarterly coupon of 4.93%.

Both deals are rated A3/A- by MoodyÆs and Standard and PoorÆs

Price guidance for the new deal has yet to be released. However market specialists expect pricing around 100bp plus over Treasuries, or in the high-40bp to low-50bp mark over mid-swaps.

Current volatility in the global debt markets makes a firm pricing range somewhat problematic. As a result, most observers expect the leads to go out with wide price guidance in the hope of generating momentum and as a buffer against the likelihood of secondary spreads blowing out further.

SwireÆs gearing ratio has improved from 14% in 2003 to 5% in 2005. While the conglomerateÆs interest rate overage fell to 5.48% in 2004 from 9.88% the year before.

Swire Pacific declared a profit of HK$ 18.8 million ($2.42 million) in 2005, comparable with a similar HK$18.9 million ($2.44 million) in profits in 2004.

Hong Kong-based Swire Pacific is a conglomerate with holdings in property and development, aviation, beverages, marine services, trading and industrial businesses. Swire is owner of Cathay Pacific and the Hong Kong Aircraft Engineering Company (HAECO) and holds the franchise to manufacture and distribute Coca-Cola products in Hong Kong and Taiwan, as well as 10 states in the USA and seven provinces in Mainland China, representing a total franchise population of over 400 million.

Swire will use the proceeds for general cap-ex purposes.