Richard Li’s FWD plans buyback of US$900 million bond via new debt

The company will use the net proceeds of the five-year and 10-year notes for general corporate purposes, including refinancing the 8.4% note

Hong Kong billionaire Richard Li’s FWD Group Holdings has offered to buy back an existing US dollar bond with planned new debt, as the insurer seeks to improve its capital structure and cut borrowing costs.

The company, controlled by the son of famed tycoon Li Ka-shing, commenced a so-called tender offer to purchase for cash its outstanding US$900 million 8.4 per cent notes due 2029, according to a filing to Hong Kong’s stock exchange on Monday (Sep 15).

The purchase price is US$1,016.5 per US$1,000 in principal amount and the cash tender is meant to “optimise the capital structure and cost of financing of the issuer”, FWD said in the filing. The offer will end at 5pm New York time on Sep 22.

Meanwhile, FWD is marketing a two-tranche, benchmark-sized US dollar bond, with pricing expected later Monday, Bloomberg News reported. The company will use the net proceeds of the five-year and 10-year notes for general corporate purposes, including refinancing the 8.4 per cent note.

The latest debt financing moves come two months after FWD raised HK$3.5 billion (S$577 million) via a stock listing in the Asian financial hub. It is also taking place ahead of the US Federal Reserve’s widely expected interest rate cut this week and amid robust investor appetite for corporate bonds.

Initial price talk for FWD’s proposed US dollar bonds is at around 210 basis points over corresponding Treasury yields for the five-year tenor and about 230 basis points for the 10-year tranche, respectively. As at mid Monday morning Hong Kong time, the deal had received orders exceeding US$3 billion, according to a source familiar with the matter who requested anonymity discussing private matters. BLOOMBERG