Emerging Markets: Mexico sells $5.8 billion in two series; India’s Reliance places $4 billion

By Rebecca Melvin

Concord, N.H., Jan. 5 – The emerging markets debt primary market popped open a varied cocktail of blockbuster deals during the past week – 2022’s first – and a forward calendar began to fill in.

Mexico sold a $5,799,344,000 global offering of notes (Baa1/BBB/BBB) in two parts on Tuesday. Also among sovereign issuers, Slovenia priced a €1.25 billion four-year bond offering and a €500 million 1 1/8% 40-year bond on Wednesday, according to multiple notices.

Indian conglomerate Reliance Industries Ltd. placed $4 billion of notes (Baa2/BBB+) in three tranches; and Export-Import Bank of Korea (Kexim) priced $3 billion of notes in three tranches, including one tranche of green notes; while Airport Authority Hong Kong sold $4 billion of notes (AA+) in four parts in the international market, all on Wednesday.

The airport deal included

• $1 billion of 1¾% senior green notes yielding 1.854% due 2027 at Treasuries plus 42.5 basis points, lower than talk in the Treasuries plus 80 bps area ($3.3 billion order book);

• $1.2 billion of 2½% notes yielding 2.509% due Jan. 12, 2032 at Treasuries plus 80 bps, 30 bps low to talk in the 110 bps area ($3.6 billion order book);

• $1.2 billion of 3¼% notes yielding 3.3% due Jan. 12, 2052 at Treasuries plus 120 bps, versus talk in the Treasuries plus 145 bps area ($2.8 billion order book); and

• $600 million 3½% notes yielding 3½% due Jan. 12, 2062 at Treasuries plus 140 bps, again 30 bps low to talk in the 170 bps area ($1.5 billion order book).

Robust oversubscription helped the issuer price the notes well below initial guidance, the press release noted.

Looking ahead, Central America Bottling Corp. is planning an offering of new notes, according to a news release on Wednesday.

The company is also tendering for and seeking consents related to its $700 million of 5¾% senior guaranteed notes due 2027 (Cusips: 15238XAB5, G20011AC9). Holders of the existing notes who wish to subscribe for new notes may do so.

Based in Road Town, British Virgin Islands, Central America Bottling produces, distributes and markets beverage products that include brands owned by PepsiCo and Ambev, and its proprietary brands, including its wellness brand Beliv.

And Doha Bank QPSC has selected bookrunners and scheduled a fixed-income investor call regarding a planned Regulation S offering of Swiss franc-denominated medium-term senior notes, according to a market source.

Credit Suisse and Deutsche Bank are joint lead managers and bookrunners of the transaction and holding the call on Jan. 10. An inaugural, short- to medium-term Swiss franc-denominated senior unsecured deal is expected to follow, subject to market conditions.

The bank is based in Doha, Qatar.

Tackling looming maturities

Shanghai -based real estate developer DaFa Properties Group Ltd. launched consent solicitations regarding its 12 3/8% senior notes due 2022 and 13½% notes due 2023, according to an announcement on Friday.

The purpose of the consent bids is to amend events of default provisions that could be tied to any default occurring in notes maturing this month.

There are $360 million of the 2022 notes outstanding and $100 million of the 2023 notes outstanding.

The company commenced a concurrent exchange offer and consent solicitation on Jan. 6 regarding its outstanding Jan. 18, 2022 notes (ISIN: 2286017640). Under the offer, the company is offering to exchange at least $166.05 million, or 90%, of the outstanding notes for notes with an extended maturity.

The solicitations will expire at 11 a.m. ET on Jan. 13.

Huachen declares bankruptcy

Meanwhile Beijing-based electricity company Huachen Energy Co., Ltd. filed Chapter 15 bankruptcy Tuesday in the U.S. Bankruptcy Court for the Southern District of New York.

The filing was aimed at gaining recognition of its proceedings in the Intermediate People’s Court of Beijing, according to a company notice issued Friday.

Ernst & Young Hua Ming LLP is the company’s foreign representative.

Minhai Liang, a representative of Ernst & Young Hua Ming, said in a declaration that from around July 2018, the company started to encounter a “challenging funding environment and liquidity pressure,” which coincided with the tightening of China’s financing policies and debt defaults by its parent company, Wintime Energy Co., Ltd.

On Nov. 18, 2019, Huachen defaulted on the interest payments then due on its 6 5/8% senior secured notes due May 18, 2020. On Jan. 20, 2020, some noteholders declared the outstanding principal amount on the notes to be immediately due and payable.

In response, the company decided to pursue a restructuring of the notes. Since then, the company has been in discussions with an informal group of noteholders advised by Kirkland & Ellis and Houlihan Lokey over the terms of the restructuring.

The company proposes extending the maturity of the notes through 2026 and reducing interest 4.65% with a portion of it to be paid in kind.

A hearing on the Chapter 15 petition is scheduled for Feb. 1.

Mexico prices out of the gate

According to FWPs filed with the Securities and Exchange Commission, Mexico priced a $2,868,146,000 tranche of 3½% global notes due Feb. 12, 2034 and $2,931,198,000 of 4.4% global notes due Feb. 12, 2052 on Tuesday.

The 2034 notes priced at 99.456 to yield 3.556%, or a spread over Treasuries of 190 bps, compared to talk for a Treasuries plus 220 bps area spread.

The 2052 notes priced at 99.606 to yield 4.424%, or a spread over Treasuries of 235 bps. The notes were talked in the Treasuries plus 265 bps area.

About $668,146,000 of the 2034 new notes and $1,031,198,000 of the 2052 new notes are intended to fund the purchase of preferred tenders in the concurrent tender offer.

Slovenia adds two tranches

Slovenia priced €1.25 billion four-year bonds with 0% coupon at 100.991 on Wednesday. The spread was 21 bps under mid-swaps for a negative 0.241% yield. Alternatively, the spread was 24.3 bps over Bunds.

The 2026 maturity date was consciously chosen to fit into Slovenia’s redemption profile.

A €500 million tranche of 1.175% 40-year notes priced at 99.745 with a mid-swaps plus 75 bps spread for a yield of 1.183%. The equivalent spread is Bunds plus 92.8 bps.

Initial guidance for the notes due Feb. 13, 2026 was in the mid-swaps minus 15 bps area yield, and the notes due Feb. 13, 2062 were talked in the mid-swaps plus 80 bps area.

Order books were in excess of €5 billion for the four-year bond and €1.6 billion for the 40-year tranche.

Kexim kickoff

Seoul-based lender Kexim priced $1 billion of 1¼% notes due 2025 at 99.85, $1 billion of 1 5/8% notes due 2027 at 99.675 and $1 billion of 2 1/8% green notes due 2032 at 99.517.

Price talk for the 2025 notes was in the Treasuries plus 50 bps area, according to a market source. The notes due 2027 were expected to price in the Treasuries plus 60 bps area. The green tranche was talked in the Treasuries plus 85 bps area.

Proceeds from the green notes will be used to finance or refinance, in whole or in part, new or existing projects or assets related to renewable energy, clean transportation, energy efficiency, sustainable water and wastewater management and pollution prevention and control in accordance with the bank’s sustainable finance framework.

Proceeds from the other two tranches will be used for general operations, including extending foreign currency loans, repayment of debt and other obligations.

Reliance galvanizes investors

Also on Wednesday, Reliance sold $4 billion of notes (Baa2/BBB+) in three tranches, according to a press release and more details from a market source.

The company sold

• $1.5 billion of 2 7/8% senior notes due 2032 at Treasuries plus 120 bps, 30 bps low to talk in the 150 bps area;

• $1.75 billion of 3 5/8% senior notes due 2052 at Treasuries plus 160 bps, 30 bps low to talk in the 190 bps area; and

• $750 million of 3¾% senior notes due 2062 at Treasuries plus 170 bps, 35 bps low to talk in the 205 bps area.

The order book for the three tranches peaked at around $11.5 billion from over 200 accounts with more than half of distributions going to Asia with a focus on fund managers.

The Mumbai-based petrochemical and retail group said proceeds would be used mainly to refinance existing borrowings.

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