Hutchison raises $5bn from bond sale
<<The company had planned to issue $3bn of bonds, but when investors ordered four times that amount, the transaction volume was increased substantially.>>
Hutchison raises $5bn from bond sale
By Angela Mackay in Hong Kong
Published: November 19 2003 19:32 | Last Updated: November 19 2003 19:32
Hong Kong-based Hutchison Whampoa on Wednesday night priced Asia's biggest global bond sale outside Japan, raising $5bn to refinance existing debt and shore up funding for its third-generation mobile telephone business.
Controlled by Li Ka-shing, the region's wealthiest businessman, Hutchison took advantage of relatively cheap borrowing rates and high levels of liquidity to launch the multi-tranche facility.
The company had planned to issue $3bn of bonds, but when investors ordered four times that amount, the transaction volume was increased substantially.
"The deal size is astounding," said Dilip Parameswaran, head of credit research at Credit Agricole Indosuez. "[The pricing] demonstrates just how much money is looking for a home and this has been reflected in demand for other Asian bonds recently."
Hutchison's bond tops the $4bn facility launched in 1998 by the Republic of Korea, ousting it as the region's biggest debt offering. The previous biggest corporate bond issue was Malaysian oil company Petronas's $2.7bn issue in May 2002.
Angus Hui, senior fixed-income analyst at Schroders Investment Management, said concern over Hutchison's $16bn investment in 3G would not greatly degrade the company's credit profile.
"Standard & Poor's has already downgraded the company but it is unlikely to go down much further - perhaps a notch," Mr Hui said. "Despite the demands of 3G, Hutchison has good cashflow from its other businesses. At the end of the day, the bonds have improved the company's debt maturity profile.
A few days ago, Li Ka-shing, chairman, admitted the 3G business would not break even until the end of 2006 because handset deliveries had been delayed.
Hutchison last night said it would sell $1.5bn of seven-year bonds at 185 basis points over US Treasury bonds, $2bn of 10-year bonds at 205 basis points above, and $1.5bn of 30-year bonds at 240 basis points over.
Mr Hui said investors were attracted to the deal because it looked set to be priced attractively compared with the $3.5bn issue sold by Hutchison earlier this year.
"There's some room to move there," he said.
Moody's and S&P have assigned the new bonds a rating of A3 and A- with a negative outlook on the issue.
Citigroup, Goldman Sachs, HSBC and Merrill Lynch were bookrunners for the deal, with Deutsche Bank assisting on the seven-year bonds, JP Morgan Chase co-leading on the 10-year tranche, while Morgan Stanley was working on the 30-year sale. |
