Emerging Markets: Ulker Biskuvi prices chunky deal as primary quiets amid election uncertainty

By Rebecca Melvin

New York, Nov. 6 – The emerging markets primary market was light this past week with sovereign issue windows virtually closed amid uncertainty regarding the U.S. presidential elections and a worrying resurgence of the Covid-19 coronavirus globally.

There was a smattering of corporate EM debt that was able to price this past week. These bond benchmarks hailed from a variety of regions and businesses and included Turkey’s confections company Ulker Biskuvi Sanayi AS – bringing Turkey’s first corporate issuance this year – Russia’s finance leasing company GTLK Europe Capital DAC with guarantors PJSC State Transport Leasing Co. and GTLK Europe DAC and Indonesia’s property development company PT Alam Sutera Realty Tbk.

Meanwhile China rolled out an assortment of bond deals typical of that space, albeit at a slower pace. Uncertainty over the U.S. presidential election for which vote counting continued into a fourth day on Friday all but shuttered other markets including the U.S. investment grade markets. Some predict strong volume next week representing pent up demand.

Ulker Biskuvi brings benchmark

Ulker Biskuvi Sanayi sold $650 million of 6.95% eurobonds at par (B+/BB-), according to an announcement and an offering circular.

The transaction was the first offering by a Turkish corporate in 2020 and the first inaugural offering by a Turkish issuer in more than two years.

BofA Securities and J.P. Morgan were global coordinators and bookrunners. HSBC acted as a joint lead manager and Rabobank and Renaissance Capital acted as co-managers.

The notes are redeemable only as a result of a change in tax law.

Proceeds will be used to complete the refinancing of the company’s capital structure.

Ulker Biskuvi Sanayi is an Instanbul-based producer of confections and baked goods.

GTLK sells $500 million notes

GTLK Europe Capital and guarantors State Transport Leasing and GTLK Europe sold $500 million of 4.8% guaranteed notes due 2028 (Ba2//BB+) at 98.49, according to a prospectus.

The notes feature a make-whole call and a par call three months prior to the maturity date.

Bank GPB International SA (Gazprombank), J.P. Morgan Securities plc, Renaissance Securities (Cyprus) Ltd., PJSC Sovcombank and VTB Capital were joint lead managers and joint bookrunners on the Regulation S issue.

The offer was three times oversubscribed, according to the company.

Proceeds will be used mainly for general corporate purposes, including refinancing outstanding dollar-denominated borrowings, including the funding of a tender offer for the $500 million of 5.95% guaranteed notes due 2021.

State Transport Leasing is a Salekhard, Russia-based finance leasing company for aircraft, railway and water transportation sectors.

Alam Sutera sells two tranches

Alam Sutera Realty issued $422.4 million of senior secured notes in two tranches, including $171.4 million of 6% notes due 2024 and $251 million of 6¼% notes due 2025 (CCC).

The notes were issued as the result of a previously reported distressed exchange by the issuer.

The principal paying agent is Bank of New York Mellon, London Branch. The lead managers and bookrunners are J.P. Morgan (SEA) Ltd. and UBS AG Singapore Branch.

The listing is expected to take effect Tuesday.

Alam Sutera is a property developer based in Tangerang, Indonesia.

Fund flows

In terms of fund flows, emerging markets bond funds recorded their 17th inflow in the past 18 weeks, according to data tracker EPFR. Notably, funds with sovereign debt mandates attracted more than twice the amount of fresh money that those dedicated to investment-grade corporate debt. At the country level, China bond funds were once again by far the biggest money magnets while Turkey bond funds extended an inflow streak stretching back to late July.

Under $1 billion found its way into U.S. bond funds, with flows to funds with mixed and government mandates offsetting redemptions from U.S. corporate bond funds of all durations and credit qualities. The post-election uncertainty prompted some investors to pull money out of municipal bond funds until they can get a better fix on likely tax and spend policies in 2021.

China issuers included Yanzhou Coal Mining Co. Ltd., Qingdao Conson Development (Group) Co., Ltd. and China Development Bank Financial Leasing Co., Ltd.

Yanzhou Coal issues benchmark

Yanzhou Coal Mining subsidiary Yancoal International Resources Development Co., Ltd. issued $500 million of 3½% senior guaranteed bonds due 2023 (Ba1) this past week.

Deutsche Bank, Standard Chartered Bank, CMB International and Haitong International acted as joint global coordinators, joint lead managers and joint bookrunners on the Regulation S deal.

Industrial Bank Co., Ltd. Hong Kong Branch, China Everbright Bank Hong Kong Branch and Shanghai Pudong Development Bank Hong Kong Branch acted as joint lead managers and joint bookrunners.

Proceeds will be used primarily to refinance debt, according to Moody’s Investors Service.

Hong Kong-based Yancoal provides coal exploration, production and distribution services.

Qingdao Conson prices

Ocean developer Qingdao Conson Development subsidiary Haitian (BVI) International Investment Development Ltd. issued $500 million of 2.8% guaranteed bonds due 2023 (BBB/BBB+), according to a notice on Wednesday.

The parent company will act as guarantor on the Regulation S issue.

Bank of China, CNCB Capital and DBS Bank Ltd. acted as joint global coordinators.

Bank of China, CNCB Capital, DBS Bank Ltd., BOC International, China Everbright Bank Hong Kong Branch, China Minsheng Banking Corp., Ltd., Hong Kong Branch, China Securities International, CMB Wing Lung Bank Ltd., Guotai Junan International, Huatai International, Industrial Bank Co., Ltd. Hong Kong Branch, ICBC International, Luso Bank Ltd. and Shanghai Pudong Development Bank Hong Kong Branch acted as joint lead managers and joint bookrunners.

Proceeds will refinance offshore debt and provide overseas investment and working capital, according to Fitch Ratings.

Qingdao, China-based Qingdao Conson invests in finance and ocean development areas. Haitian (BVI) International Investment is its wholly owned subsidiary.

CDB prices three-year notes

China Development Bank Financial Leasing priced $500 million of 1½% notes due 2023 (//A+) under its $3 billion medium-term note program, according to a notice.

The notes were issued by CDBL Funding 1 and are guaranteed by CDB Aviation Lease Finance DAC with the benefit of a keepwell and asset purchase deed provided by China Development Bank Financial Leasing.

Standard Chartered Bank, Bank of Communications, China Citic Bank International, Mizuho Securities, ANZ, Haitong International, ICBC Singapore, Guotai Junan International, CMB International, Natixis, China Minsheng Banking Corp. Ltd., Hong Kong Branch, ABC International, China Securities International and CTBC Bank are the joint lead managers and joint bookrunners for the Regulation S offering.

Listing of the bonds on the Stock Exchange of Hong Kong Ltd. was effective Thursday.

China Development Bank Financial Leasing is a subsidiary of Beijing-based China Development Bank.

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