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Hong Kong's PCCW Raises US$750m In New York
by Mike Godfrey, Tax-News.com, New York
08 November 2001


Pacific Century CyberWorks (PCCW), the Hong Kong telecommunications company, placed US$750m of bonds through a subsidiary in New York on Wednesday, taking advantage of falling interest rates to clean up its balance sheet. The company's PCCW-HKT Capital Ltd unit sold 7.75 percent notes due in 2011 at 99.705 cents on the dollar to yield 7.793 percent, or 3.60 percentage points more than comparable-maturity US Treasuries. That was at the upper range of price guidance, which had suggested a spread of 3.50 to 3.60 percentage points more than Treasuries.The money is to be used to partially repay a $4.7bn syndicated loan. Standard & Poor's, the rating agency, said that PCCW-HKT Telephone, PCCW's fixed-line business, planned to pay down an additional $750m using internal cash.

In July, PCCW was forced to pull a larger $2.5bn bond issue in markets made choppy by Argentina's looming default. Analysts said yesterday's successful issue was positive for PCCW because it improves the profile of PCCW's $7.5bn debt and allows it to lock in low long-term interest rates.

Analysts said PCCW rushed to the market to beat Singapore Telecommunications, which kicks off roadshows on Monday for the sale of up to $2 billion in bonds. Standard & Poor's rates the Pacific Century CyberWorks notes "BBB," its second-lowest investment grade, while Moody's Investors Service rates them "Baa1," roughly one notch higher. The notes are guaranteed by Pacific Century CyberWorks' core unit PCCW-HKT Telephone Ltd.

Asian telecommunications companies have recently enjoyed stronger global investor interest than their troubled European peers, being less hobbled by problems with third-generation wireless ventures, and have encouraging growth prospects.

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