Cheung Kong (Holdings) S$500 million senior perpetual securities

Joint bookrunners: DBS Bank, J.P. Morgan

In the first deal of its kind in the region, Hong Kong conglomerate Cheung Kong (Holdings) priced a S$500 million guaranteed senior perpetual bond, representing the first ever Asian corporate hybrid structured on a senior basis.

It was configured to allow the company to treat this as equity in its financial statements, thereby removing the need for any foreign exchange mark-to-market risk for this instrument, unlike a debt instrument.

It was structured to achieve 100% accounting equity credit with no step up and callable from year five. The offering was more issuer-friendly than the recent comparable deals and featured no restrictive covenants.

The transaction provided Cheung Kong with attractive low-cost equity with a coupon of 5.125%.

The bonds were well-received in the secondary market, trading up to 100.50 at the break. The deal was the largest bond priced by a foreign corporate in the Singapore dollar market, adding depth and diversity, which offers arbitrage opportunity to Hong Kong borrowers.