久久久无码人妻精品无码_6080YYY午夜理论片中无码_性无码专区_无码人妻品一区二区三区精99

Economy

Markets

Industries

Insights

Reports

Events

Merchants Bank to raise 30b yuan in bond sale

(China Daily/Agencies)
Updated: 2008-06-13 09:18

China Merchants Bank Co, the country's most profitable lender, plans to raise as much as 30 billion yuan ($4.3 billion) in its biggest bond sale to bolster capital after acquiring Hong Kong's Wing Lung Bank Ltd.

The Shenzhen-based bank may sell the subordinated debt on the mainland or overseas, it said in a statement published in the China Securities Journal yesterday, adding any overseas portion would not exceed 10 billion yuan.

Merchants Bank has yet to set the interest rate for the five-year notes and will seek shareholder approval on June 27, it said.

The company will sell the debt to keep its capital adequacy ratio above the regulatory minimum of 8 percent.

The bank agreed June 2 to buy 53.1 percent of Hong Kong-based Wing Lung for HK$19.3 billion ($2.5 billion) in cash and is required to make a general offer for the rest of the lender, valuing it at $4.66 billion.

"The bank doesn't have a choice and debt is more viable" to finance the deal, said Lee Yu-kei, a Hong Kong-based analyst at Core Pacific-Yamaichi International Ltd. "Subsequent high interest expenses will offset revenue contribution from Wing Lung in the short term."

Lee downgraded China Merchants to "sell" from "hold" on Wednesday.

The takeover values Wing Lung at 3.1 times its March 31 book value and is the most expensive bank acquisition in Hong Kong since 2001. It is the first overseas purchase for China Merchants.

Merchants Bank's capital adequacy ratio, a key measure of financial strength, would drop to 6.7 percent after goodwill deduction following the Wing Lung buyout, from 10.7 percent at the end of last year, according to a Goldman Sachs Group Inc estimate.

Standard & Poor's said last week it has put Merchants Bank's credit rating on review for a possible downgrade as the Wing Lung acquisition "would have a material and far-reaching impact on Merchants Bank's core capitalization."

Merchants Bank has a BBB- long-term rating, the lowest investment grade.

Subordinated debt is considered as supplementary capital. In the event of bankruptcy, subordinated debt holders receive payment only after senior debt claims are paid in full.

Shares in Merchants Bank dropped 19 percent in Hong Kong and 39 percent in Shanghai this year. It's A shares fell 2.9 percent to 23.4 yuan yesterday while H shares slid 2.32 percent to HK$25.3.