(Adds details of the loan, background)
By Prakash Chakravarti and Saeed Azhar
HONG KONG/SINGAPORE, April 2 Three banks are
providing a fully underwritten $4.95 billion bridge loan to
Singapore's Overseas-Chinese Banking Corp Ltd (OCBC) to fund its
offer to buy Hong Kong-based Wing Hang Bank, according to
sources close to the matter.
Bank of America Merrill Lynch (BofA), HSBC and J.P. Morgan
are sharing equal underwriting of the loan, the sources said,
which will have a 12-month tenor.
The size of the loan, which is the same as OCBC's
all-cash offer for Wing Hang, shows how hungry lenders
in the region have become to book assets and finance large
BofA, HSBC, and J.P. Morgan
declined to comment. OCBC did not return a call seeking comment.
OCBC said on Tuesday that it has agreed to buy Wing Hang for
HK$125 per share, or $4.95 billion, in a deal that would give
the Singapore lender a much sought-after gateway to the Greater
The sources said the bridge will be taken out by capital
markets fundraisings to be determined later this month. OCBC
said on Tuesday that it planned to raise equity but did not give
OCBC's bridge loan will be the second such banking
acquisition-related loan in Hong Kong in recent months.
Last October, four banks provided a $1 billion bridge loan
to Yue Xiu Enterprises Holdings Ltd for its HK$11.64 billion
($1.50 billion) purchase of a 75 percent stake in Hong Kong
lender Chong Hing Bank Ltd.
Record low interest rates across the globe have fuelled
cheap loans and huge borrowing levels in Asia. Following the
region's quick recovery from the 2008 financial crisis, banks
have thrown themselves at the feet of companies with strong
credit ratings and the desire to purchase assets at home and
While that has helped Asian companies expand their
businesses, leverage levels across the region have risen
sharply, sparking concerns that a sharp economic slowdown would
spark the kind of debt distress China is showing signs of.
The $8 billion loan for Chinese e-commerce giant Alibaba
Group completed last July is an example of the appetite among
lenders. Nine banks underwrote the loan initially, while nine
other lenders joined the deal subsequently.
($1 = 7.7571 Hong Kong Dollars)
(Reporting by Prakash Chakravarti of IFR/LPC and Saeed Azhar;
Editing by Michael Flaherty and Ryan Woo)