Hong Kong conglomerate CK Hutchison Holdings returned to US dollar bond market with a dual-tranche offering totalling US$2 billion, including a green bond tranche.

The Reg S/144A issuance was equally split at US$1 billion each with the five-year green tranche priced at 99.805% with a coupon of 5.375% to offer a yield of 5.420%. This was equivalent to a spread of 80bp over the US treasuries, which was in line with the final price guidance and 35bp tighter than the initial price range of 115bp area.

The other tranche was for 10 years, which was priced at 99.348% with a coupon of 5.50% and a re-offer yield of 5.586%. This represented a spread of 100bp over the US treasuries, which was also in line with the final price guidance and 35bo inside the initial marketing range of 135bp area.

The deal, issued through CK Hutchison International, generated a combined order book of US$6.7 billion, with the five-year bonds garnering a total demand of US$3.6 billion from over 190 accounts. In terms of geographic distribution, 77% of the bonds were allocated in Asia, 15% in the Americas and 8% in EMEA. By type of investors, banks accounted for 45% of the paper, asset and fund managers 42%, pension funds and insurance companies 8%, public sector 3%, and private banks and corporates 2%.

The 10-year tranche attracted an order book of US$3.1 billion from 180 accounts with 54% of the paper sold in Asia, 42% in the Americas and 4% in EMEA. Asset and fund managers were the biggest buyers of this tranche with 54%, followed by banks with 25%, pension funds and insurance 13%, public sector 7%, and private banks and corporates 1%.

The proceeds from the green bonds are earmarked to finance or refinance assets, projects, investments and other related and supporting expenditure in accordance with CK Hutchison’s sustainable finance framework, while the proceeds from the 10-year bonds will be used to refinance certain indebtedness and for general corporate purposes.

BNP Paribas was the sustainability structuring adviser for the transaction, as well as a joint bookrunner, along with BofA Securities, Citi, DBS, Deutsche Bank, Goldman Sachs, HSBC and J.P. Morgan.

CK Hutchison printed its first green bond in October 2021 amounting to €500 million (US$537.60 million) with a tenor of 12 years, marking its debut sustainable finance transaction.

Fitch Ratings, which assigned an A- rating to the bond issuance, expects CK Hutchison’s major segments to improve modestly in 2024 with the recovery in its European telecom division, slight improvement in throughput in its ports division and robust growth in the retail division. It notes that the group’s balance sheet has improved in recent years, supported by tower asset sale proceeds.

CK Hutchison previously accessed the US dollar bond market in April last year, with a larger issuance amounting to US$2.5 billion, also in two tranches of five years and 10 years. That deal generated a combined order book of US$12.6 billion.