Citic Securities International (CSI) finally returns to the market after monitoring the market for a long time. It has been a few weeks since CSI closed the market window, now the announcement of the mandate shows that CSI is open again. Towngas Smart Energy and Bank of East Asia also return. CSI took the opportunity with investors before the Fed meeting early May. It is during another interest rate rise or balance sheet reduction announcement.
The firm raised $300m from a maiden bond deal before the Fed’s meeting, said IFR Asia. The price at 99.65 is for 3.375% senior Reg S bonds to yield 3.499%. It was equal to 90bp over Treasuries. It covers initial price guidance of 125bp area. A banker on this trade analyzed that the firm decided to focus on the short end of the curve. He added that a bunch of Chinese FIGs issue five-year, however the investors’ preference is three-year.
Since the market condition remains uncertain, CSI’s bookbuilding might be challenging. But a third banker said that CSI is a strong credit. The rates were up and the US CPI data so the order book is less than the expectation. When there was an announcement on final price guidance, orders peaked at $1.2bn. It included $865m from the joint lead managers. This deal could be oversubscribed, the borrower decided to keep it at only $300m. Thus, they could focus on the prospective investors.
After gauging investor interest on Monday, bookrunners found a fair value at 90bp. It determined that CICC HK was the closest comparison. When CSI was out, CICC HK was trading at a G-spread of 93bp. Investors are also eyeing Shenwan Hongyuan Securities and Huatai Securities. They trade very tight at around 75bp. However, the third banker argued that since the bond issue is through CSI rather than the head office like the others, CICC HK is therefore comparable.