ICBC Macau on September 3 priced US$320 million of tier 2 bank capital securities that do not comply with Basel III rules, making it one of the few old style Basel II-compliant bank capital securities in the market.

As the city does not yet require banks to adhere to Basel III rules, the Macau subsidiary of ICBC was able to make the transaction without the contractual non-viability loss-absorption, a key feature required under the said rules.

The 10-year non-call five notes were priced at a spread of 225bp over five-year treasuries, representing 25bp tighter than the initial guidance of 250bp at which the bonds were marketed.

Priced at 99.64%, the bonds offer a coupon of 3.875% and reoffer yield of 3.955%. The notes have one-time issuer call option on September 10 2019 at par, together with accrued interest, subject to regulatory approvals.

Being a rare structure in the current regulatory environment, the transaction garnered a huge order book of over US$2.7 billion from around 137 accounts.

The Reg S offering was sold largely to Asian accounts with Asia taking 78% of the deal, while European investors were allocated 22%.

By investor type, fund managers represented 53% of the final allocation, insurance 22%, banks 13%, private banks 10% and corporates 2%.

ICBC Macau, ICBC International, HSBC and Standard Chartered were joint global coordinators, bookrunners and lead managers for the deal.