Savings giant NSB yesterday set the record straight in relation to certain recent news items regarding its successful $ 750 million international bond issue.
Following is the full text of NSB’s statement:
NSB wishes to clarify its position on certain news items and on statements made at various forums on the international bond issue. In 2013 National Savings Bank entered into the international market to raise funds by issuing a USD bond under the ruling RegS/144A. A RegS/144A means that it complies with US regulations and that of the Asian and European regulations.
In terms of the relevant regulations only institutional investors are allowed to participate in subscribing for the issue with a minimum subscription value of $ 200,000.
The bond for $ 750 m with a five-year tenor was priced on 12 September 2013 at a coupon rate of 8.875%.
The issue was oversubscribed 2.5 times approximately, and 172 subscribers committed for $ 2.3 b. The allocation was made among 141 applicants with a good spread among investors.
The spread of the investor community to the NSB bond issue ranged from the US to Asia that covers all three time zones. Geographically US contributed 39%, Europe with 38% and Asia with the remaining 23%. The categorisation of investors ranged from fund/asset managers with 88%, banks with 10% and insurance companies and other institutions with 2% of the issue.
Therefore, we wish to emphasise to the general public that no individual investors were among the subscribers to NSB international bond.
NSB was rated on par with the sovereign by two rating agents, and the bond carried an international rating of BB-.
In the first week of September none of the bonds in the secondary market of Singapore Debt Exchange traded at par except of the Vietnamian’16 and Vietnamian’20. All others were trading at a discount. The average $ 100 bond was trading between prices of $ 78-99.
In the global market, certain bonds that carry identical issuer/issue ratings to that of NSB was trading at levels of 8.3% p.a., to 8.5% p.a. with comparable maturities.
When an issuer who is not known to the investors enters the international market for the first time, a debut issue is priced higher than that of a seasoned issuer.
The NSB bond being a non-sovereign issue would have had to pay a margin of 100 bp to 150 bp over a sovereign issue. Nevertheless, in reality the initial book building started at rates above 9.25% and NSB was able to drive the price down due to the strong demand shown by over 170 investors with a commitment of over $ 2.3 billion.
The issue price was finally set at 8.875% and not at 9% or above as has been stated at various forums. NSB wishes to highlight that the proceeds were never deployed at 7% or below the cost but always at a margin.
The NSB bond was trading near par immediately after the issue. If the pricing was way beyond the market rates, the post issue should have been traded at high premiums.
www.ft.lk
In terms of the relevant regulations only institutional investors are allowed to participate in subscribing for the issue with a minimum subscription value of $ 200,000.
The bond for $ 750 m with a five-year tenor was priced on 12 September 2013 at a coupon rate of 8.875%.
The issue was oversubscribed 2.5 times approximately, and 172 subscribers committed for $ 2.3 b. The allocation was made among 141 applicants with a good spread among investors.
The spread of the investor community to the NSB bond issue ranged from the US to Asia that covers all three time zones. Geographically US contributed 39%, Europe with 38% and Asia with the remaining 23%. The categorisation of investors ranged from fund/asset managers with 88%, banks with 10% and insurance companies and other institutions with 2% of the issue.
Therefore, we wish to emphasise to the general public that no individual investors were among the subscribers to NSB international bond.
NSB was rated on par with the sovereign by two rating agents, and the bond carried an international rating of BB-.
In the first week of September none of the bonds in the secondary market of Singapore Debt Exchange traded at par except of the Vietnamian’16 and Vietnamian’20. All others were trading at a discount. The average $ 100 bond was trading between prices of $ 78-99.
In the global market, certain bonds that carry identical issuer/issue ratings to that of NSB was trading at levels of 8.3% p.a., to 8.5% p.a. with comparable maturities.
When an issuer who is not known to the investors enters the international market for the first time, a debut issue is priced higher than that of a seasoned issuer.
The NSB bond being a non-sovereign issue would have had to pay a margin of 100 bp to 150 bp over a sovereign issue. Nevertheless, in reality the initial book building started at rates above 9.25% and NSB was able to drive the price down due to the strong demand shown by over 170 investors with a commitment of over $ 2.3 billion.
The issue price was finally set at 8.875% and not at 9% or above as has been stated at various forums. NSB wishes to highlight that the proceeds were never deployed at 7% or below the cost but always at a margin.
The NSB bond was trading near par immediately after the issue. If the pricing was way beyond the market rates, the post issue should have been traded at high premiums.
www.ft.lk
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