Historic Cayman bond issue underwritten by HSBC

(CNS): The Cayman Islands Government’s USD312 million, 5.95 per cent notes closed on 24 November 2009 and are due November 2019, with HSBC Bank acting as Sole Book Runner on the first-ever public bond issue for the CIG. Floated on the international bond markets, the issue was enthusiastically received and was four times over-subscribed, a release from the HSBC said. This highly successful bond issue was also historic for HSBC, as it was the first Caribbean bond issue led by the Bank and the lowest yield ever achieved by any Caribbean issuer in the US dollar public bond markets, the release said.

The arrangement of the bond was a result of a very close collaborative effort between the Corporate Banking team at HSBC Bank (Cayman) Ltd. and other HSBC personnel in the Global Capital Financing – Latin America and Caribbean Syndicate team (New York, London and Hong Kong) as well as the Government Sector team (New York and London).

HSBC’s global reach, in all key investor markets, played a very important role in arranging and coordinating a three-week investor road show for the CIG across major business centres in Europe, the US and Asia. HSBC’s key players for the bond issue joined together with Premier McKeeva Bush and other senior members of the government to meet with senior executives of several large investment management firms in seven locations — London, Los Angeles, San Francisco, Boston, New York, Singapore and Hong Kong.

The bond issue, originally announced on Wednesday 18 November 2009, attracted numerous high-quality accounts which enabled the Issuer to release price guidance at a "6.00% to 6.125%" yield area. The deal generated positive momentum overnight, with heavy participation from Asian and European accounts, building a USD1.2 billion (with a four-times over-subscription rate) order book, which allowed the Issuer to revise price guidance and ultimately launch and price the bond at a 5.95% yield.

“Subscribers to the bond issue represented a diversified order book, with US accounts comprising 41 per cent of demand, Asia accounting for 30 per cent and Europe taking up 29 per cent. This created an entirely new investor marketfor the Cayman Islands going forward and raised awareness of Cayman globally,” noted Gonzalo Jalles, Chief Executive Officer of HSBC Cayman.

Jalles was also appreciative of the opportunity for HSBC to support the Cayman government on such a significant transaction. “We at HSBC Bank (Cayman) Ltd. are also especially pleased that after only 18 months of expanded banking operations in the Cayman Islands, our local Corporate Banking team together with our HSBC colleagues overseas, were able to assist the Cayman Islands Government with the single largest international bond transaction executed to date,” he stated.

“This clearly demonstrates HSBC’s global capabilities to guide first-time and infrequent issuers through the bond marketing and deal execution and further underscores HSBC’s unparalleled global distribution capabilities and execution abilities, even in periods of uncertain market conditions,” he added.

HSBC Cayman was also responsible for providing bridge financing facilities for the Cayman Islands Government prior to the bond issue.

Mark McIntyre, Head of Corporate Banking at HSBC Bank (Cayman) Ltd., who was also a member of the Cayman delegation on the international road shows held in Europe, the USA, and Asia last month, noted, “The over-subscribed response of the bond issue was a clear testimony of the level of investor confidence that the international community has in the Cayman Islands.”

“The Cayman Islands Government were very well prepared for the rigors of the three-week road-show and were extremely well-received in all of the seven cities that were visited,” McIntyre said. “It was evident that not only was the bond issue popular with investors, but the international investor community regards the Cayman Islands as a place to do business,” he added.

Chairman of HSBC Bank (Cayman) Ltd and Chief Executive Officer of HSBC Bank of Bermuda, Philip Butterfield underscored HSBC’s commitment to the Cayman Islands. “We are pleased to see the exceptional progress that HSBC has been making in the Cayman Islands after just over one year of launching its Corporate Banking and Personal Financial Services lines of business. We continue to be fully supportive of these efforts and are also committed to expanding our banking operations and services in the Cayman Islands as we move into Phase 2 of our strategic plan early in 2010,” he said.