The sale of the institutional tranches in the Hong Kong government's HK$6 billion ($769 million) securitization of tunnel revenues was completed last week. And, as expected, the deal - led jointly by HSBC Securities and Citibank Global Markets - was a complete blowout. Twenty-two institutions participated on the one-year A1 tranche and 40 on the 3.4-year A2 notes, both of which were rated AA+', Aa3' and AA-' by Fitch Ratings, Moody's Investors Service and Standard & Poor's, respectively.
Unsurprisingly with such strong investor interest, the leads were able to attain spreads at the tight end of the targeted range. The HK$450 million fixed-rated A1 notes offer a 1.19% coupon, 4 basis points over the one-year Hong Kong dollar swap rate, and were 3.2X oversubscribed. The HK$3.1 billion floating rate A2 notes came in at 36 basis points over three-month Hibor and were 4X oversubscribed. Both pieces priced at par.