Bloomberg News

Standard Chartered Leads Rise in Note Sales Tied to China Firms

March 08, 2013

Standard Chartered Plc (STAN) is leading a revival in sales of structured notes tied to the debt of China’s largest companies as investors seek access to assets underpinned by growth in the world’s second-biggest economy.

The lender’s Hong Kong and Singapore units have sold $41.4 million of the securities this year, accounting for more than 80 percent of all issuance, according to data compiled by Bloomberg. Barclays Plc is the only other issuer, with $10 million, as Standard Chartered leads the market for the first time ever, the data show.

The combined $51.4 million in sales of the notes linked to state-owned companies follows an absence of such securities in the fourth quarter, according to the data. Issuance is reviving after data showing economic growth in China accelerated last quarter for the first time since 2010.

Gabriel Kwan, a Hong Kong-based spokeswoman for Standard Chartered, didn’t immediately respond to two e-mails and two messages seeking comment on the reason for the increase in sales.

The bank issued $20 million of notes tied to bonds offered by the Singapore unit of Industrial & Commercial Bank of China (601398) Ltd., China’s third-largest company by market value and the world’s largest lender. The five-year securities, sold in three offerings from January through March 1, pay a quarterly coupon of 165 basis points above the three-month dollar London interbank offered rate.

Moody’s Investors Service rates the underlying bonds at A1, its fifth-highest grade.

Standard Chartered and Barclays this year also issued a combined $20 million of securities linked to Bank of China Ltd. (3988), China’s fourth-biggest company by market value, according to Bloomberg data. Standard Chartered sold the first-ever notes linked to closely held China National Petroleum Corp. and China State Grid Corp. this year, raising a total of $11.4 million.

Issuers of credit-linked notes use the securities to hedge against possible credit events and pay the buyers for accepting the risks as long as the underlying assets don’t default.

To contact the reporter on this story: Jun Yang in Hong Kong at jyang180@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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