Banks are sweeping as much dollars as can be found in the global market as European borrowers are holding on to their dollars “during these hard times.”
According to FinanceAsia, Asian borrowers want a steady and reliable source of dollars for their funding needs as well as capital needs for protection.
“Indeed, bank borrowers in China, India, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand have all tapped dollar markets during the past few weeks and there could be more to come as banks strive to avoid a repeat of the dollar funding crunch they experienced during the crisis,” the prestigious regional publication said.
In the recent weeks, Bangkok Bank raised $1.2 billion, Citic Bank $300 million, and RHB Bank $200 million.
The bonds offer a coupon of 3.875 percent and were priced at 99.824 to yield 3.9 percent, or 325 basis points over US Treasuries, after tightening guidance down from 350 bp during the course of the day. Citic is rated Baa2 by Moody’s and BBB by Fitch. HSBC and Royal Bank of Scotland were joint global coordinators and joint bookrunners alongside BBVA and Nomura.
“Asian investors bought 80 percent of the deal while the rest went to Europe. Fund managers took 63 percent, banks 18 percent, 14 percent, insurers and others five percent. There was a $0.20 discount for private bank buyers,” FinanceAsia noted.
It added that Bangkok Bank became the fourth Thai borrower to tap the market in little more than a week, despite having been the first to launch a roadshow. Kasikornbank, PTT Global Chemical and Siam Commercial Bank (SCB) all beat it to market.
On the upside, Bangkok Bank was the only one of raising 10-year money in the US, under Rule 144a, which meant that it enjoyed decent support and managed to perform better than its Thai peers – the $400 million five-and-a-half-year tranche came at 212.5bp over Treasuries, while the $800 million 10-year tranche came at 215bp.
FinanciaAsia further noted that demand of around $7 billion was skewed toward the 10-year tranche, which attracted $4.6 billion of orders from 250 accounts, with 49 percent placed with investors in Asia, 16 percent went to Europe and the remaining 35 percent to the US. By account type, 60 percent went to fund managers, 20 percent to insurers, 12 percent to banks, seven percent to private banks and one percent to others.
The five-and-a-half-year tranche attracted $2.8 billion of orders from 200 accounts and was distributed in a similar way to the 10-year, with the bulk of the deal going to fund managers in Asia and the US.