-- Debut dim sum bond from ABN AMRO Bank
-- Order book 100% Asian, with private banks predominance
-- Paves the way for next U.S.-dollar denominated subordinated
bond, which will be marketed to Asian investors
By Serena Ruffoni
(Rewrites throughout, updates with detail, comment from Group
treasurer)
Dutch lender ABN AMRO Bank NV priced Wednesday a small dim sum
bond, its first foray into the offshore renmimbi market with a 500
million yuan ($78.8 million) two-year bond.
The order book for the senior unsecured issue, which was deemed
as a "toe in the water" bond issue, was placed entirely with Asian
investors, with CNY800 million orders from 60 investors.
"This was a debut deal, addressed to Asian investors, which will
help the group's diversification of funding sources and support the
group's operations in Asia", said Erik Bosmans, Group Treasurer at
ABN AMRO.
According to Mr. Bosmans, the order book was composed for 70% of
Asian private banks and 30% of institutional investors based in
Singapore, Hong Kong, Taiwan and other Asian locations.
The bank has no current plans to issue another bond denominated
in renmimbi in the near future, but next week it will roadshow a
U.S.-dollar denominated Lower Tier 2, a type of subordinated bond,
to Asian investors.
Subordinated bank bonds rank lower in bankruptcy than senior
unsecured bonds, but offer a higher return. ABN AMRO priced a EUR1
billion, 10-year Lower Tier 2 subordinated bond in July this year,
and will "double up" with this upcoming dollar issue, Mr. Bosmans
said.
The market for dim sum bonds, which are denominated in Chinese
yuan and issued in Hong Kong, is still small but has grown quickly
in the past two years. But recent yuan fluctuations has made it
more costly for issuers, slowing down the dim sum bond market.
Around CNY33 billion of corporate dim sum bonds have been issued
until August this year, compared with CNY79 billion for the whole
of 2011, Dealogic data show.
Although Asian entities are largely dominating, European
companies and banks have recently stepped up efforts to issue
offshore yuan bonds. HSBC Holdings PLC (HBC) issued its debut CNY2
billion bond in April this year, while Volkswagen AG (VOW.XE),
Tesco PLC (TSCO.LN), and BP PLC (BP.LN) all issued offshore yuan
bonds during 2011.
The ABN AMRO deal priced at par with a 3.50% yield. The bond is
rated A2 by Moody's and A+ by both Standard & Poor's and
Fitch.
ABN AMRO Bank N.V., Goldman Sachs International, HSBC and
Standard Chartered Bank were joint bookrunners of the deal.
Write to Serena Ruffoni at serena.ruffoni@dowjones.com