The exchange added pressure
to SoftBank’s US$2.75bn 6% and
US$1.75bn 6.875% perpetual
notes. The perps callable
in 2023 widened to 8.24%
on March 14, and the perps
callable in 2027 to 7.83% on
March 19, respectively, their
highest yields since pricing last
July, according to Thomson
Reuters data.
Lenovo also tried to move
some holders of existing bonds
into its new issue. Proceeds
from the new money will be
used to fund a tender offer for
the US$1.5bn 4.70% 2019s and
US$500m 3.875% 2022s.
Lenovo had offered to accept
up to US$1.5bn of bonds
in the tender, with priority
given to holders of the 2019s
that subscribed to the new
issue. In the end, it accepted
US$513.756m of the 2019s
from holders that bought the
new issue, US$200m from
other holders of the 2019s,
and none from holders of the
2022s.
“The tender was also slightly
below expectations as they
tried to limit the premium
offered for the tender,” said the
banker. “We were working on
this trade back in January, and
markets have turned a bit since
then.”
Baidu’s US$1.5bn benchmark
used its entire approved quota,
but paid a premium over a
secondary curve that had
already widened month to date.
The Treasury spread on its
3.5% 2027s had risen about
20bp and on its 2025s about
10bp since the start of March,
according to Thomson Reuters
data.
“Marrying the US investor
base and Asian investor
base was somewhat more
challenging than it used to be,”
said a banker on the deal.
“We saw some lumpy,
triple-digit tickets. For rare
tech names, there’s still a bid
out there, and we can still see
that people are warehousing
their cash. However, new-
issue concessions are higher
than people are used to, and
the move from initial to final
guidance has slowed.
HKBN redials for tighter loan
Loans Telecom operator’s latest refinancing targets yield-starved lendersBY PRAKASH CHAKRAVARTI,
EVELYNN LINHong Kong’s leveraged finance
market is on a roll with local
broadband and telecoms
services provider HKBN the latest
borrower to take advantage of
lenders’ seemingly insatiable
appetite for high-yielding
financings.
Just over a year after agreeing
to a HK$4.1bn five-year bullet
loan in November 2016, HKBN
is seeking an amendment and
extension to cut the interest
margin and lengthen the tenor.
BNP Paribas is coordinating the
exercise.
HKBN aims to reduce its
interest margin to 105bp over
Libor, based on its total net
leverage of 3.38x as of August
31 last year, from 135bp on the
2016 loan, based on gearing
of around 3.30x. The maturity
will be extended by around 18
months for existing lenders who
agree to roll over their exposure.
HKBN’s ability to push
for improved terms so soon
underlines the depth of
demand for higher-margin
assets among lenders looking to
boost their returns.
“We still have interest in
lending as we face excess
liquidity and we don’t have
many other choices. We would
like to book the assets in the
first half of this year to meet
our target returns,” said a Hong
Kong-based senior banker at
a Taiwanese bank, an existing
lender to HKBN.
HKBN has been down the
refinancing road before, since
private-equity firm CVC Asia
Pacific first acquired it from
Hong Kong Television Network,
formerly City Telecom (Hong
Kong), for HK$4.9bn in 2012.
The HK$2.5bn debt supporting
the leveraged buyout was
refinanced twice through a
bond and a loan before HKBN
listed on the Hong Kong stock
exchange in March 2015 and
then completed the HK$4.1bnloan in November 2016.
On each refinancing, HKBN
has managed to win favourable
terms from lenders looking for
richer yields than their usual
staple of tightly priced loans
from high-grade borrowers,
such as property sector credits.
Earlier this month, Hong
Kong real-estate giant SUN
HUNG KAI PROPERTIES more than
quadrupled a self-arranged five-
year refinancing to HK$21bn
from a HK$5bn target after
attracting 16 banks. The loanoffered an all-in pricing of
75bp, based on an interest
margin of 65bp over Hibor.PUSHING IT
Still, some bankers believe
HKBN is pushing pricing too
far this time. They are wary
of HKBN’s business prospects
in an ultra-competitive sector
requiring frequent capital
expenditure.
“The competitive landscape
in Hong Kong’s telecom
sector is getting fiercer and
the challenge for operators is
to find new ways to diversify
revenues, while constantly
upgrading their networks and
offerings to keep up pace with
evolving technologies,” said one
leveraged finance banker in
Singapore.
HKBN acquired the
telecommunications and online
marketing solutions businesses
of New World Telephone in
2016 and made an aggressive
bid a few months later for
Wharf T&T, the telecom
business of Wharf Holdings.
Last year, HKBN also enteredthe fray for Hutchison Global
Communications, the fixed-line
unit of Li Ka-shing’s Hutchison
Telecommunications Hong
Kong Holdings.
HKBN lost out in the race for
Wharf T&T and withdrew early
from the bidding for HGC. Both
targets ended up in the hands
of PE firms and led to multi-
billion dollar LBO loans.
Meanwhile, HKBN had
already notched up more than
200,000 subscribers to its mobile
services as of last July sincelaunching 10 months earlier.
Its latest deal will add to the
many leveraged financings in
Hong Kong in recent months.
They include a HK$13.8bn
three-year bullet loan
supporting the buyout of
commercial properties of Link
Real Estate Investment Trust,
a HK$16bn three-year senior
loan partially financing a
consortium of investors buying
Hong Kong skyscraper The
Center and a US$255m five-
year financing backing Affinity
Equity Partners’ purchase of a
majority stake in garment label
maker Trimco International
Holdings.
Those three loans offer much
more generous pricing than
the one for HKBN. Link REIT’s
borrowing pays a top-level all-in
pricing of 200bp, based on an
interest margin of 185bp over
Hibor in senior syndication,
while the Center’s new owners
sweetened terms on the loan
last month and now offer an
interest margin of 160bp over
Hibor. Trimco’s loan pays all-in
pricing in the high 300s. For daily news stories
visit http://www.ifrasia.com“The competitive landscape in Hong Kong’s
telecom sector is getting fiercer and the challenge
for operators is to find new ways to diversify
revenues, while constantly upgrading their
networks and offerings to keep up pace with
evolving technologies.”