Wing Hang Bank launches $225 million perpetual bond

The deal is being closely watched as it may prompt other regional banks and corporates to take a second look at issuance.
Mid-sized Hong Kong lender Wing Hang Bank is to sell $225 million worth of perpetual upper tier-2 bonds with a coupon of 9.375%, sources close to the deal say. The coupon was set at the bottom of the guidance range of 9.375%-9.5% provided by Wing Hang on Tuesday. The bond is expected to price at about 100.

The bonds are callable at par on September 11, 2013, five years after the date of issue and are rated A3 by MoodyÆs and BBB+ by Fitch Ratings.

The deal is being closely watched by investors as it is expected to start a rush of issuance from Asian corporates and banks after a dry summer when most of them took a wait-and-see attitude to the global markets, hoping for a recovery that never came. Market watchers have divided opinions with regard to this recovery, with a growing number of them warning of a status quo in the last quarter of the year. Others say the pipeline, especially in North Asia, will start getting busy towards the end of September. The Korean government will embark on a roadshow next week for the launch of a sovereign bond later in the month.

According to data, G3 debt (dollars, euro or Japanese yen) issuance has slumped 41% to $22.9 billion year-to-date to August 31, when compared to the same period in 2007.

A source says Wing Hang is raising the debt as it has $275 million worth of outstanding bonds that mature in 2013, but will become callable in October. Last year in April, Wing Hang issued $400 million of tier-2 perpetual bonds with a 6% coupon. That deal was managed by Deutsche Bank, HSBC, Merrill Lynch and Royal Bank of Scotland.
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