Bank of China (Hong Kong) contributes $6.25 million USD to a $100 million USD three-year tranche of a $400 million USD syndicated loan to Korea Development Bank for unspecified purposes

Project narrative

On September 18, 2002, a syndicate of 14 banks — including the Bank of China (Hong Kong) Limited (BOCHK) — entered into a $400,000,000 USD syndicated term loan agreement with Korea Development Bank (KDB) — a South Korean state-owned development bank — for unspecified purposes. The term loan was divided into three tranches: a $200,000,000 USD Tranche 1 with a maturity period of one year and an interest rate of LIBOR plus a margin of 10 basis points (bps), $100,000,000 USD Tranche 2 with a maturity period of two years and an interest rate of LIBOR plus a margin of 15 bps, and $100,000,000 USD Tranche 3 with a maturity period of three years and an interest rate of LIBOR plus a margin of 25 bps. The borrower was expected to draw down the loan on September 25, 2002. BOCHK contributed $12,500,000 USD to the $200 million USD Tranche 1, as captured by Record ID#110598. In addition to BOCHK, the following lenders contributed to the tranche: ABN AMRO Bank N.V. ($27,300,000 USD), Barclays Bank Plc ($27,300,000 USD), Deutsche Bank AG ($82,100,000 USD), Tokyo-Mitsubishi International (HK) Limited ($27,300,000 USD), Landesbank Schleswig-Holstein Girozentrale (LB Kiel) ($8,500,000 USD), and Bank of Montreal ($15,000,000 USD). BOCHK contributed $6,250,000 USD to the $100 million USD Tranche 2, as captured by Record ID#110599. In addition to BOCHK, the following lenders contributed to the tranche: ABN AMRO Bank ($24,000,000 USD), Barclays Bank ($23,500,000 USD), Tokyo-Mitsubishi International (HK) ($24,000,000 USD), LB Kiel ($8,250,000 USD), Bank of Montreal ($14,000,000 USD), and Land Bank of Taiwan Co., Ltd. (LBOT) ($14,000,000 USD). BOCHK contributed $6,250,000 USD to the $100 million USD Tranche 3, as captured by Record ID#110600. In addition to BOCHK, the following lenders contributed to the tranche: ABN AMRO Bank ($5,000,000 USD), Barclays Bank ($5,500,000 USD), Tokyo-Mitsubishi International (HK) ($5,000,000 USD), Bayerische Landesbank (BayernLB) ($25,000,000 USD), LB Kiel ($8,250,000 USD), Banco Nacional Ultramarino S.A. ($15,000,000 USD), the Hong Kong Branch of Hamburgische Landesbank - Girozentral ($15,000,000 USD), the Singapore Branch of Banca Monte dei Paschi di Siena S.p.A. (BMPS) ($5,000,000 USD), KBC Bank N.V. ($5,000,000 USD), and Hamburger Sparkasse AG (Haspa), Hamburg ($5,000,000 USD). ABN AMRO, Barclays, Deutsche, and Tokyo-Mitsubishi International (HK) served as mandated lead arrangers. BOCHK, BayernLB, and LB Kiel served as lead arrangers. Banco Nacional Ultramarino, Bank of Montreal, and the Hong Kong Branch of Hamburgische Landesbank served as co-arrangers. LBOT served as senior lead managers. The Singapore Branch of BMPs, KBC Bank, and Hamburger Sparkasse served as lead managers. During syndication, Tranche 1 was met with what FinanceAsia called "disastrous reception", with only three lenders, including BOCHK, joining with commitments of $36 million USD (18% of the tranche amount) compared to the typical 50% minimum is commonly believed to be successful. Observers believed that the banks that joined did so for relationship reasons with KDB rather than the transaction itself. Still, as much as $150 million USD was raised in the syndication stage for the total loan.