Gorilla of Hong Kong's wake-up call
Hutchison publicly blames its abandonment of a foray into euro bonds on adverse market conditions. But the company and its advisers seem to have neglected to weigh up specific reasons for investor caution.
Hutchison Whampoa's Frank Sixt is unlikely to forget October in a hurry. Instead of waxing lyrical about rolling out 3G services to select customers in the UK and the opening of a couple of 3G stores in the UK and Italy, the Hong Kong conglomerate's group finance director spent much of his time explaining his company's botched foray into international capital markets.
Late on September 30, Sixt took the unprecedented decision to cancel Hutchison's planned e1.5 billion multi-tranche bond issue. Against a backdrop of falling global equity markets and widening corporate bond spreads, he was left with little choice. But such treatment by the market was a sharp shock for an Asian corporate that is used to getting exactly what it wants.
As one analyst puts it: "The big gorilla of Hong Kong got a wake-up call. It now knows that, unlike in the domestic arena, it can't bully the international market into giving it the price it wants."
Other large Asian corporates planning similar ventures would be wise to take note of Hutchison's experience.
In public, Sixt, alongside his three joint lead arrangers - Deutsche Bank, HSBC and JPMorgan - lays all the blame for the pulling of the deal on market conditions.