The tap of the 10-year transaction is a $240 million offering that prices off a 5.625% coupon but is priced at 100.479% with a re-offer yield of 5.558% or a spread of 94bp over 10-year US Treasuries.
The original Reg-S transaction priced at 99.547% on a coupon of 5.625% to yield 5.685%, equivalent to 100bp over comparable US Treasuries or around 47bp over Libor. Prior to pricing the new transaction, this deal was trading at 91bp over Treasuries.
The new tap, also rated A3/A-, is a further draw-down from a $1.5 billion 10-year fixed-rate MTN programme that was launched in March by Swire Pacific MTN Financing and Swire Properties Offshore Financing. The programme carries a guarantee from Swire Pacific.
The new tap brings the total issue size of the deal to $600 million.
Initial guidance was released at 95bp to 98bp over Treasuries with a deal size slated for $200 million, but as the deal picked up momentum, the leads were able to tighten guidance to 94bp to 97bp while adding an additional $40 million to the transaction.
The leads closed the books with $700 million in total orders. Geographically the deal was split 81% into non-Japan Asia, 10% into Europe and 9% into Japan. By investor type, banks took 67%, funds 18%, insurers 13% and private banks 2%.
Heading into the original deal, the key comparables being quoted were other Hong Kong-based conglomerates like Hutchison Whampoa, which has an outstanding 2014 deal. Hutchison, which carries a similar rating to Swire at A3/A-, but is two years shorter, has a $2 billion 6.25% bond which was quoted at 97bp over US Treasuries.
The proceeds from the sale of the notes will be used as general working capital. Swire Pacific is a Hong Kong-based 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.