Huatai Securities issues its first offshore senior unsecured floating rate bonds which was close to twelve times oversubscribed

On February 5^th 2020, Huatai Securities Company Limited (‘Huatai Securities’ or ‘Company’) issued offshore USD400 million of 3-year floating rate senior unsecured bonds; coupon and yield were 3-month Libor+95bps; the Company was rated ‘BBB/Positive’ by S&P and ‘Baa2/Stable’ by Moody’s and the bonds were rated ‘BBB’ by S&P. This was the Company’s first offshore floating rate bond issuance and received a vast amount of recognition by global investors. Total book orders exceeded USD4.7 billion, being nearly twelve times oversubscribed and the offering achieved the highest subscription multiple by a Chinese Securities & Brokerage house since 2018. Huatai Financial Holdings (Hong Kong) Limited acted as the lead Global Coordinator in the deal and assisted the Company throughout the entire bond issuance process, including reviewing transaction documents, selecting the issuance window, roadshow preparations, and securing anchor orders. Bank of China, ICBC, and JP Morgan also acted as the Joint Global Coordinators in this deal.

The bond offering was the first Chinese investment-grade bond issuance after the Lunar New Year in 2020. The issuance was considered to be extremely successful and in turn helped stabilized market confidence even in the mist of the Covid-19 epidemic outbreak. Moreover, it paved the way for the subsequent bond issuances by other Chinese issuers. The initial price guidance was set at 3-month Libor+125bps and was later tightened down 30bps to 3-month Libor+95bps and the result greatly benefited the secondary market yield curve as a whole. The offering ended with USD4.4 billion book orders from 113 diversified investors, of which 72% were banks, 22% were asset managers/fund managers and 6% were insurance/hedge fund/others, and 99% of the investors were from Asia.

Since the pricing of the bonds, the bond’s secondary market yield has tightened down even further. Currently the bond is considered to have the lowest credit spread to be ever priced by a Chinese Securities & Brokerage house.