Amount: $500m lower tier two capital
Maturity: 9 June 2016
Issue price: 99.854
Coupon: three month Libor plus 30bp until 9 June 2011; three month Libor plus 80bp thereafter
Spread at re-offer: three month Libor plus 33bp
Call option: at par from 9 June 2011
Launch date: Wednesday 30 November
Payment date: 9 December
Joint books: Lehman Brothers,
Standard Chartered has been seeing decent risk weighted growth through 2005 and this transaction was to top up its tier two capital for 2005.
The reason behind the choice of maturity and step-up is that the borrower has a relatively high number of redemptions in 2010 and so we pushed the new issue into 2011.
The bank issued a dollar 10 non-call five this February — a similar transaction to the new bond — and that is one of the deals being called in 2010 so we pushed the call here slightly longer to manage their maturity structure.
We went out Tuesday morning Asia time, marketing a $300m-$500m sized deal at 34bp area and, by Wednesday morning London time, we closed the book at just over $1.3bn. We revised guidance to 33bp and pretty much all of the book stayed together at 33bp — in fact we lost less than $100m of demand — allowing us to price $500m at 33bp. We are quoting the bonds (Thursday) at 33bp/32bp.
The existing Standard Chartered issue was trading at around Libor plus 30bp just before the new issue was announced so 33bp offers a little bit for the curve and a small benefit to investors above that.
Distribution was UK 62%, Europe ex-UK 17%, Asia 14% and Middle East 7%. By investor type, banks took 59%, asset managers 26%, insurance companies 12% and other 3%.
Standard Chartered has a strong following in the UK but we also had decent participation from Asia, Europe and the Middle East. In addition, the deal offered relative value at 33bp over versus the existing bonds and other comparables.
As a general note, we are seeing good demand for floating rate issues. When we are able to offer an FRN with spread, in addition to the regular bank buyers, there is also demand from asset managers who have taken an interest rate decision and making allocations into floating rate notes, which brings a bit of additional demand.
"...based on its rating, this looks aggressive. There are some different views on this credit, but compared to similar names it looks tight at plus 33bp. But I don't know how much Asian participation there was and this might have been driving it."
"...this was another good trade.
It is a well liked name and always looks a little bit cheap compared to similarly rated names.
It was 4bp wider than Santander Totta, which to me is a material difference. It offers good value."
"...the deal is trading in and around re-offer. There should have been a strong Asian component in the book but it is a name that sells well in Europe and the UK as well.
They have paid a decent spread compared with some of the other dollar lower tier two deals this week — Crédit Agricole and Nordea have both printed this week at 22bp over.
These two banks are higher rated but Standard Chartered is a high quality business and a differential of 10bp/11bp is correct."