Seven lenders submitted $1bn underwriting tickets — the amount needed to join during the senior phase. Crédit Agricole, DBS, Natixis, Rabobank, Royal Bank of Scotland and Standard Chartered were allocated $450m each, while Industrial and Commercial Bank of China took away $350m, according to a banker.
Sole bookrunner Bank of China kept $1bn on its books.
The lead invited some 15 banks to come on board, but only seven finally joined. ING was also initially considering the deal, but opted against committing, said bankers.
The deal raised plenty of concerns among loans bankers, who questioned its structure and the chunky leverage size. Shuanghui is a Hong Kong-based holding company, but the majority of its cash flows are accumulated onshore in China — a factor that created doubts about the company’s abilities to repay its debt. Also following the acquisition, the company's leverage is expected to be around seven times debt to Ebitda.
But despite the issues, Bank of China managed to rope in enough lenders at the top level, which bankers reckon is a sign the loan will do well in general too.
A general launch is tentatively scheduled for this month, added bankers.
The Chinese pork producer is tapping the market to finance its acquisition of US company Smithfield Foods. The $4bn loan is split two ways: a $2.5bn three year tranche has a margin of 350bp over dollar Libor, while a five year portion is priced at 450bp over Libor. They have weighted average lives of 2.7 years and 4.7 years, respectively.
Banks that pledge to the three year earn fees of 150bp and an all-in of 400bp, while lenders to the five year earn 250bp fees and an all-in of 500bp.