Euroweek Debt capital markets, December 2 2011
2 December, 2011Euroweek debt capital markets, December 9 2011
9 December, 2011Euroweek, December 3 2011
Hyundai Capital demonstrated the appetite that remains for the right Asian names with a 10-times subscribed $500 million deal that caught a mood of improved investor sentiment.
Hyundai Capital America, a vehicle guaranteed by Hyundai Motor Company, set out yesterday [Thursday] for a maximum of $500 million in 5.5-year senior notes through a five-strong bench of joint bookrunners: BNP Paribas, JP Morgan, HSBC, Bank of America Merrill Lynch and Morgan Stanley.
It did so on the back of rare positive news from Europe, with a coordinated injection of liquidity by leading central banks. When China further improved the mood by reducing the reserve ratio by 50 basis points, effective December 5, it was clear that the issuer had timed its run perfectly. Those close to the deal say the Regulation S/Rule 144a transaction’s books had topped $1 billion by lunchtime in Asia; by the time US accounts were active, the book crossed the $5 billion mark, with 320 participating accounts. Having been offered with guidance of 345 basis points over US Treasuries, it was launched at T+315. The 4% notes came at an issue price of 99.551%.
A slight majority went into the US, with 54%, followed by Asia with 34% and the European Union 12%. This was a stark contrast to a $750 million bond from ICBC just 24 hours earlier, which hold sold 95% into Asia with almost no participation from investors in the west. Fund managers took 60% of the Hyundai deal, with banks and private banks 20%, insurers and pension funds 11%, and corporates and others 9%; this too was notably different to ICBC, where one third of the book came from insurers.
“This is a great name to bring to the market at any time, and especially in the choppy conditions we have been seeing,” said someone close to the deal. “We’ve only seen the best names being able to get things away: Indonesia, PLN, KDB. This name has been well followed in the US, Europe and Asia for a long time, and we were watching the market with them looking for the right window.”
While Hyundai could clearly have raised far more, it had capped the issue at $500 million since that was all the funding it needed; this may have contributed to the size of the book as investors, expecting to be scale back, bid for more than they needed.
The deal has tightened around 10 basis points since launch, on an otherwise generally flat day in the equity and debt markets after yesterday’s exceptional rallies.
It is not clear, though, whether this window will prompt many other new issuers to launch. Bankers point out that the end of the year is close by. “You may see one or two more trades potentially, but I wouldn’t put it at any more than that,” said one banker.
