Standard Chartered Plc’s Asia units have sold a record amount of structured notes in 2013, led by issuance in South Korea.
The bank’s South Korea, Singapore and Hong Kong units raised the equivalent of $2.5 billion this year as of June 17 from securities tied to interest rates, credit and foreign exchange, the most for any full-year period, according to data compiled by Bloomberg. Sales in South Korea, which surged almost three-fold, accounted for 75 percent, the data show.
Issuance of structured notes in Asia’s fourth-largest economy accelerated this year on demand for high-yielding investments. London-based Standard Chartered is increasing its dominance in the market, almost doubling its share to 74 percent as of the end of May, according to data compiled by Bloomberg, which doesn’t track securities issued by brokerages.
Valerie Tay, a Singapore-based spokeswoman for Standard Chartered, declined to comment on the company’s structured-note issuance in Asia.
Structured notes can allow banks to raise funds cheaply as the lenders can effectively sell on the securities from their swap counterparts to investors at lower costs than what they would pay for regular-debt issuance, according to Chae Kyu Cheol, a researcher at Nice Pricing & Information, a Seoul-based bond pricing agency. The products also incur extra administrative expenses, he said.
Diversifying tenors, coupon types and counterparties through structured-note issuance is positive for the lender, said Sabine Bauer, a Hong Kong-based analyst at Fitch Ratings, which rates the bank at AA-, its fourth-highest level.