Slaughter and May, Hong Kong, advised MTR Corporation Limited (MTRCL) on the issuance by its wholly-owned subsidiary, MTR Corporation (C.I.) Limited (MTRCI), of USD3 billion subordinated perpetual capital securities (the Securities), being MTR’s inaugural issuance of subordinated perpetual securities. The Securities represent the largest-ever US dollar subordinated perpetual securities issuance by a corporate issuer in Asia (excluding Japan). The Securities are guaranteed by MTRCL and are listed on the Hong Kong Stock Exchange.
The Securities were issued in two equal tranches under MTR’s USD15 billion Debt Issuance Programme. Each tranche is redeemable at the option of MTRCI at the relevant times (including, in the case of the exercise of a par call option, at any time from 24 September 2030 (in the case of the first tranche) or 24 September 2035 (in the case of the second tranche)).
The distribution rate on the first tranche of the Securities is fixed at 4.875% per annum in the first 5.5 years, reset at year 5.5 and every 5 years thereafter and with step up margins applied at year 10.5 and year 25.5 respectively. The distribution rate on the second tranche of the Securities is fixed at 5.625% per annum in the first 10.5 years, reset at year 10.5 and every 5 years thereafter and with step up margins applied at year 10.5 and year 30.5 respectively. The distributions on the Securities can be deferred at MTRCI’s discretion provided that MTRCI and MTRCL shall not, subject to certain exceptions, (a) declare or pay any dividends or distributions or make any other payment on, or (b) redeem, reduce, cancel, buy-back or acquire for any consideration, any of their obligations with ranking lower than or equal to the Securities until the payment of such deferred distributions.
The Securities qualify as 100% equity on MTR’s balance sheet and have received 50% equity treatment from Moody’s and Standard & Poor’s (S&P), thereby strengthening MTR’s robust financial standing for the long term. Being rated “A2” by Moody’s and “A” by S&P, the Securities have achieved the highest issue ratings ever granted by Moody’s and S&P on a US dollar corporate hybrid issuance globally.
Crédit Agricole CIB, HSBC, J.P. Morgan, Société Générale and UBS acted as the Joint Global Coordinators, Joint Lead Managers and Joint Bookrunners for the issuance of the Securities, with ANZ, Bank of China (Hong Kong), Barclays, DBS, Deutsche Bank, Mizuho and Standard Chartered Bank being the Joint Lead Managers and Joint Bookrunners.