Emerging Markets: Saudi Arabia, Alibaba bring $5 billion deals; Cyprus, Hong Kong price

By Rebecca Melvin

New York, Feb. 5 – The pace of new issuance in emerging markets bonds remained strong this past week as the first month of 2021 slipped into the rearview mirror. Asia continued to churn out paper, and Latin America was more active than the Central & Eastern Europe and the Middle East and Africa regions, according to Prospect News’ data.

That said, MENA’s Kingdom of Saudi Arabia priced $5 billion of 12- and 40-year notes on Tuesday, including $2.75 billion of 2¼% series 20 notes due 2033 at 99.105 to yield 2.336% and $2.25 billion of 3.45% series 21 notes due 2061 at par to yield 3.45%. And the CEE’s Republic of Cyprus brought a €1 billion deal of 0% notes due 2026.

The Cyprus notes priced at 99.735 to yield 0.053%, or a yield spread of mid-swaps plus 48 basis points, which was significantly tighter than initial talk for yield in the area of mid-swaps plus 60 bps, and orders for the Cyprus notes at the time final guidance was released topped €7.5 billion.

Another blockbuster this past week was China’s Alibaba Group Holding Ltd. The Hangzhou, China-based online and mobile commerce company priced $5 billion of notes in four parts, including $1.5 billion of 2 1/8% notes due 2031 at 99.839; $1 billion of 2.7% sustainable notes due 2041 priced at 99.265; $1.5 billion of 3.15% notes due 2051 at 99.981 and $1 billion of 3¼% notes due 2061 at 99.978.

Back in the government realm, Hong Kong Special Administrative Region of the People’s Republic of China sold $2.5 billion of notes due in five, 10 and 30 years, including $1 billion of 5/8% notes due 2026; $1 billion of 1 3/8% notes due 2031 and $500 million of 2 3/8% notes due 2051.

The notes were sold under the issuer’s HK$100 billion global medium-term note program.

Also, Airport Authority Hong Kong sold $1.5 billion of notes in two parts due 2031 and 2051.

The $900 million 1 5/8% note due 2031 priced at 99.140. It is callable for a make-whole premium and has a three-month par call.

The $600 million 2 5/8% note due 2051 priced at 99.711. It is callable for a make-whole premium and has a six-month par call.

The proceeds will be used to fund capital expenditures including the capital expenditure of the 3RS Project and for general corporate purposes.

Macau resort developer and operator Sands China Ltd. priced $796,938,000 of 3.8% senior notes due 2026 and $697,375,000 of 4 3/8% senior notes due 2030, according to an announcement.

Listing of the notes on the Stock Exchange of Hong Kong Ltd. is expected to become effective Feb. 5.

And leasing company CMB International Leasing Management Ltd. sold $400 million of 2% notes due 2026 and $400 million of 2 7/8% notes due 2031, according to a Stock Exchange of Hong Kong listing notice.

News related to debt burdens continues to mingle with all of China’s issuance news. Dr. Peng Holding Hongkong Ltd. announced it has scheduled a meeting of the holders of its $500 million 7.55% guaranteed notes due 2020 to consider extending the maturity of the notes to 2021 and other changes.

The meeting will be convened on March 1. Holders will be asked to approve a proposed resolution for modifying certain terms and conditions of the notes including an extension of the maturity and provision of additional collateral under the notes.

The Chinese media and entertainment company provides broadband and cloud computing services.

Luckin Coffee Inc. filed a Chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York on Friday, according to a press release.

The Chapter 15 petition seeks recognition in the United States of the company’s provisional liquidation pending before the Grand Court of the Cayman Islands.

Luckin said it is negotiating with its stakeholders regarding the restructuring of its financial obligations, to strengthen its balance sheet and enable it to emerge from the Cayman proceedings as a going concern.

The filing is not expected to materially impact the company’s day-to-day operations.

Luckin said it continues to meet its trade obligations in the ordinary course of business, including paying suppliers, vendors and employees.

The coffee chain is based in Beijing. The Chapter 15 case number is 21-10228.

Back to issuance away from China, Export-Import Bank of Korea (Kexim) priced $1.5 billion of fixed-rate notes in three tranches, according to FWP filings with the Securities and Exchange Commission.

Kexim priced $500 million of 3/8% notes due Feb. 9, 2024 at 99.869, $700 million of 5/8% notes due Feb. 9, 2026 at 99.451 and $300 million of 1 3/8% notes due Feb. 9, 2031 at 98.761.

And Woori Bank issued $550 million of ¾% senior sustainability notes due 2026 on Monday. The bank is also based in Seoul.

Moving west, India’s Adani Ports and Special Economic Zone Ltd. issued $500 million 3.1% senior notes due 2031 (Baa3/BBB-/BBB-) on Tuesday.

The issuer will use proceeds from the Rule 144A and Regulation S deal to refinance early redemption of its $500 million of 3.95% notes due January 2022.

Continuing across the Atlantic, Inter-American Investment Corp. sold $1 billion of 5/8% five-year sustainability notes.

The new notes priced at 99.592 to yield 0.707%, or a spread over mid-swaps of 13 bps. Initial price talk was in the mid-swaps plus 15 bps area.

The agency provides financing and technical assistance to businesses in Latin America and the Caribbean and is based in Washington, D.C.

For Brazil, Hidrovias International Finance Sarl, a subsidiary of Hidrovias do Brasil SA, sold $500 million of 4.95% notes due 2031, the proceeds of which will be used to fund a tender offer, as previously reported.

Based in Sao Paulo, Brazil, Hidrovias is the largest inland waterway services company in Brazil.

Sao Paulo-based rental car company Movida Participacoes SA sold $500 million of 5¼% sustainability-linked notes due 2031. They are the first issue of sustainable notes issued by a car rental company. To maintain the interest rate, the company must reduce its greenhouse emissions by 30% by 2030.

If the target is not met in 2025, the interest rate will increase to 5½% until the maturity of the notes.

For Mexico, Comision Federal de Electricidad priced $2 billion of notes on Tuesday, including $1.2 billion of 3.348% notes due 2031 and $800 million 4.677% notes due 2051.

CFE is a Mexico City-based electric company.

Mexico’s Nueva Elektra del Milenio SA de CV, a subsidiary of Grupo Elektra SAB de CV sold $500 million seven-year notes with a 4 7/8% coupon (//BBB-/HR: BBB+), according to a company notice.

The notes were talked in the low 5% area, according to a market source.

It was the first investment-grade issue for the company.

The notes have a 4.5-year weighted average life, and Grupo Electra will guarantee any default payment and additional amounts.

The online shopping portal is based in Mexico City.

Atento SA subsidiary Atento Luxco 1 sold $500 million of 8% senior secured notes due Feb. 10, 2026.

The company plans to use proceeds from the Rule 144A and Regulation S offering to refinance its outstanding 6 1/8% senior secured notes due 2022 under a concurrent cash tender offer.

Luxembourg-based Atento is a provider of customer relationship management and business process outsourcing services in Latin America.

With the bond issue spigots still on, investors continued to put money toward especially emerging markets hard-currency bond funds this past week, according to EPFR, a subsidiary of Informa plc and fund flows data tracker.

Hard currency funds outgained local currency ones by a 9-to-1 margin and “once again, broad warnings about the pace that debt burdens are building up in key emerging markets has not deterred investors,” EPFR said in a weekly update called EPFR Global Navigator.

“They committed fresh money to Frontier Markets Bond Funds for the 11th straight week and steered another $887 million into China Bond Funds despite the record $30 billion in Chinese corporate defaults during 2020.”

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