CITIC Bank's debut CLO
China CITIC Bank priced its debut Rmb4.077bn (US$582m) CLO last Wednesday. It was the first such deal since China Development Bank issued a Rmb3.76bn CLO in April.
The deal divides up into a Rmb500m Triple A rated A1-1 tranche with an expected maturity of July 26 2009, which priced at 4.45%; an Rmb800m Triple A rated A1-2 tranche with a maturity of October 26 2009, which priced at 4.65%; a Rmb2.134bn Triple A rated A2 tranche maturing on July 26 2010, which priced at 99bp over the one-year deposit rate; and a Rmb414m Single A rated B piece that matures on January 26 2011 and pays 2.28% over the one-year deposit rate. There was also a Rmb229m unrated subordinated portion – 5.61% of the total – with an expected maturity of April 26 2011. All of the ratings are from Lianhe Credit Rating.
Pricing for the four rated tranches was determined through public bidding, while the subordinated tranche will be sold through a private placement. The settlement date was tentatively set for last Friday while the legal maturity is March 28 2013.
CITIC Securities was the financial adviser, lead manager and bookrunner. Standard Chartered Bank acted as the structuring adviser.
The transaction is backed by 36 corporate loans from 30 borrowers originated by 10 CITIC branches in various provinces and major cities. All the loans in the pool are performing and 22.14% are guaranteed. At August 22 2008, the weighted average interest rate was 7.11% for a weighted average remaining tenor of 14 months.
CITIC’s new deal came through a special purpose trust called Xin Yin 2008-1 Credit Asset Backed Securities SPT. It came from the second batch of securitisation pilot projects approved by the authorities in November 2006.