SBLC no match for volatility as Hebei Iron debuts

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By Rev Hui
21 Oct 2014

Hebei Iron and Steel was forced to price its debut offshore bond more than 20bp wider than its closest comparables on October 20, despite the fact the bond was supported by a standby letter of credit from one of the joint global co-ordinators, Agricultural Bank of China. While SBLCs have reduced pricing in the past, it failed to help this time around as choppy markets proved to be too much.

Brought to the market by joint global co-ordinators Agricultural Bank of China and HSBC, the three year transaction was launched with initial price guidance set at 210bp over Treasuries.

Investors were slow to buy into the bonds and, after hours of bookbuilding, orders amounted to just ...

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