Industrial and Commercial Bank of China has printed its first senior bond for 2021, raising a combined $3bn-equivalent from a five tranche carbon neutrality themed green deal.
The jumbo size and a weak market backdrop impacted some of the tranches as investors are cutting duration to reduce risks.
The state-owned bank's Thursday deal comprised a $1.05bn 1% three year bond and a $1bn 1.63% five year tranche, issued by its Singapore and Hong Kong branches, respectively. A €500m 0.125% three year was printed by the bank's Luxembourg branch and a £250m 1.625% four year tranche was issued through ICBC London. The last portion, a MOP200m two year bond, was privately placed by ICBC's Macau arm.
As always, the A1/A/A rated issuer established some landmarks from the deal, whose proceeds will be used for funding eligible green assets under its green bond framework.
The sterling tranche, for instance, was the first fixed-rate transaction in the currency by a Chinese issuer this year. This adds another funding option for Chinese high grade borrowers that usually tap the dollar and euro markets.
The ICBC Singapore 2024 bonds were priced at 99.814, or a 1.063% yield and 30bp over US Treasuries. ICBC Hong Kong’s 2026s were priced at 99.976, yielding 1.63% or at 85bp over. Both these dollar tranches were tightened 40bp from the initial price guidance. At reoffer, orders exceeded $3.1bn and $2.7bn, respectively.
Analysts at CreditSights had pegged fair value for the 2024 and 2026 notes at 25bp over and 45bp over US Treasury. The 2024s widened in the secondary market on Friday to 32bp to 35bp over range, while the 2026 notes were trading around reoffer.
"We had prepared the deal for a long time at a jumbo size," said a syndicate banker close to the fundraising. "For the dollar five year, we expected a lot of drop in orders after final guidance, but the book stayed stable."
She added that the Hong Kong arm's portion received orders of about 2.7 times the final deal size. International buyers, including sovereign funds, showed interest, she said.
ICBC Luxembourg’s euro bonds were priced at 99.785 or at a 0.197% yield and 40bp over mid-swaps. These notes were tightened 30bp from initial guidance and saw a final orderbook of €1.45bn, including €355m from the lead managers.
ICBC London’s 2025 sterling notes were priced at 99.662, or at a 95bp spread over UK Treasury, witnessing a 15bp tightening. Orders for this tranche were £390m.
The smallest tranche was from ICBC’s Macau branch, which printed the notes at par paying a 0.6% yield, 25bp inside initial guidance.
While ICBC managed to push through all the portions past the finish line, and get tight pricing levels, the deal did face some headwinds due to rates volatility, said bankers. Investors are still also nervous about the stress among Chinese property developers, including names like China Evergrande Group.
The three year tranche through the Singapore branch had Crédit Agricole, DBS, HSBC, ICBC, SMBC Nikko and Standard Chartered as global co-ordinators, lead managers and bookrunners.
Agricultural Bank of China, ANZ, Bank of China, Bank of Communications, Bank of East Asia, China Construction Bank (Asia), China Everbright Bank Hong Kong branch, China International Capital Corp, China Minsheng Banking Corp, China Securities International, Citi, CLSA, CMB Wing Lung Bank, E.Sun Bank, First Abu Dhabi Bank, Guotai Junan International, Industrial Bank Co Hong Kong branch, Maybank, Mirae Asset Securities (Singapore), MUFG, National Australia Bank, OCBC, Shanghai Pudong Development Bank Hong Kong branch, SPDB International, UOB and Zhongtai International Securities (Singapore) as lead managers and bookrunners.
The Hong Kong branch's deal was run by eight banks: ABC Hong Kong branch, Bank of China, BNP Paribas, CCB (Asia), China Everbright Bank Hong Kong branch, Citi, Crédit Agricole, HSBC, ICBC, Standard Chartered and UBS.
Another 10 banks — Bank of America, BoCom, CICC, China Securities International, CLSA, CMB Wing Lung, CMBC Capital, CBA, Industrial Bank, KDB Asia and SPDB Hong Kong branch — backed the deal as lead managers and bookrunners.
The Luxembourg branch’s deal was led by Citi, Crédit Agricole, ICBC, Natixis and Societe Generale as the global co-ordinators. BOC, BIL, CCB (Europe), CICC, Rabobank, Deutsche Bank, SEB and UBS supported the deal as the bookrunners and lead managers.
The long four year sterling portion was led by Barclays, Citi, Crédit Agricole, HSBC, ICBC and StanChart as global co-ordinators, while BOC, BNP Paribas, China Zheshang Bank Co Hong Kong branch, CMBC Capital, DBS, ICBC International and JP Morgan were the lead managers. Crédit Agricole was green structuring adviser on this portion.
ABOC Macau branch, Banco Nacional Ultramarino, Bank of China Macau Branch, BoCom Macau branch, CCB Macau branch, CGB Macau branch, ICBC, Luso Bank and Macau Chinese Bank were global co-ordinators, lead managers and bookrunners on the Macau pataca tranche.
The world’s largest bank by assets, ICBC previously hit the debt market in September with a mammoth additional tier one offering, as well with another deal through ICBC Leasing.