Emerging Markets: Philippines, Indonesia price; Korea Housing, KEB Hanna also bring benchmarks

By Rebecca Melvin

Concord, N.H., March 25 – Republic of the Philippines sold a $2.25 billion three-part offering of global bonds on Monday (Baa2/BBB+/BBB), and Republic of Indonesia sold $1.75 billion of bonds in two parts (Baa2/BBB/BBB) on Tuesday, according to FWP filings with the Securities and Exchange Commission.

The Philippines’ bonds priced at par and included $500 million 3.229% bonds due March 29, 2027, with a spread of Treasuries plus 90 basis points; $750 million 3.556% bonds due Sept. 29, 3032, with a spread of Treasuries plus 125 bps; and $1 billion 4.2% bonds due March 29, 2047 with a spread over Treasuries of 165.7 bps.

Indonesia priced $1 billion of 3.55% notes due 2032 at 99.583 to yield 3.6%. The spread priced as 121.9 bps over the benchmark Treasury.

Also, the offer included $750 million of 4.3% bonds due 2052, priced at 99.167 to yield 4.35%. The spread priced out at 172.9 bps over the relevant benchmark Treasury.

Concurrently with its new notes, Indonesia started a cash tender offer for nine series of global bonds for up to a maximum purchase price that had not yet been determined.

Also on Tuesday, Korea Housing Finance Corp. sold €600 million of 0.723% social covered bonds due 2025 (AAA). The Regulation S and Rule 144A listing is expected on the Singapore Exchange effective March 23.

In addition to the housing finance company, a second lender based in Seoul, South Korea also priced a deal. KEB Hana Bank priced $600 million 3¼% five-year sustainability notes to yield Treasuries plus 92.5 bps on Wednesday, according to a market source.

Talk was in the Treasuries plus 125 bps area.

In other regions, details emerged of Federal Republic of Nigeria’s $1.25 billion of 8 3/8% senior notes due 2029, which priced at par last week. The notes, maturing March 24, 2029, are non-callable. The notes (expected ratings: B2/B-/B) were sold under Rule 144A and Regulation S and are expected to be listed on the London Stock Exchange on Thursday. The sovereign may also apply for the notes to be listed on the FMDQ Securities Exchange Ltd. and the Nigerian Exchange Ltd.

The syndicated deal was sold via Chapel Hill Denham Advisory Ltd., Citigroup Global Markets Ltd., Goldman Sachs International, J.P. Morgan Securities plc and Standard Chartered.

Looking ahead, Mamoura Diversified Global Holdings PJSC subsidiary MDGH GMTN (RSC) Ltd. will price a dollar-denominated dual-tranche benchmark offering of fixed-rate bonds in two tranches due March 29, 2027 and March 29, 2032, according to a notice.

The investment firm based in Abu Dhabi.

Hard currency emerging markets bond funds stanched their bleeding, posting their first inflow since early January and biggest since mid-December, according to EPFR data. But the hemorrhaging continued for local currency emerging markets funds, which saw more than $1 billion flow out as investors cut their exposure to Chinese debt. Emerging markets high-yield bond funds extended their longest run of outflows since the first quarter of 2020, and frontier markets bond funds chalked up a seventh outflow in the past 10 weeks.

Meanwhile, U.S. high-yield bond funds experienced the heaviest redemptions in both dollar and percent of assets under management terms. The U.S. inflation rate is “making a run at 8%,” and the Federal Reserve is signaling its next interest hike will be bigger than the 0.25% hike they kicked off the cycle with earlier in the month, EPFR wrote by way of explanation of the flows.

With Russian debt flirting with default and Chinese real estate issuers under pressure, there is little cover for fixed-income investors, EPFR wrote in their weekly update published Friday.

Nevertheless, the latest week’s total for EPFR-tracked bond funds was the smallest outflow since the run began in early January, and Europe bond funds posted an inflow for the first time since the second week of January.

Payments go missing

China’s Yango Group Co., Ltd. missed payments on four onshore notes and three other series, and Shinsun Holdings (Group) Co., Ltd. said it failed to pay a coupon on its 12% notes by the grace period expiration. Meanwhile, China Evergrande Group gave notice that it will not be able to publish its audited results for the year ended Dec. 31 on or before March 31.

In addition to non-payment of principal and interest of four series of its onshore notes as announced on the website of the Shenzhen Stock Exchange on March 18, Yango has not made any payment of principal and interest under its 5.3% senior notes due Jan. 11, 2022 (ISIN: XS2281349618); principal and interest under its 10¼% senior notes due March 18, 2022 (ISIN: XS2008157856); or interest due on Feb. 25 under its 8¼% senior notes due 2023 (ISIN: XS2122380822), according to a company announcement on Tuesday.

The non-payment may trigger possible acceleration of the repayment of the company’s existing offshore financing arrangements.

Yango said it is making efforts to resolve its liquidity issues, hoping to achieve the best outcomes for the company and all of its stakeholders.

The company said it will keep holders of its offshore notes and other stakeholders updated.

Yango is a real estate development company based in Shanghai.

Shinsun announced that the interest payment due on Feb. 18 under its $200 million 12% senior note due 2023 (ISIN: XS2369849745) has still not been made.

The company had a grace period of 30 days to pay the $12 million of interest due on Feb. 18.

The grace period has expired, according to the company announcement on Monday.

Shinsun said it is assessing its liquidity position, overall business operation and operating environment. The company said it will also engage in talks with the bondholders to try to find ways to address the current liquidity issue.

The company has appointed Sidley Austin as its legal adviser on the matter.

The real estate development company is based in Hong Kong.

China Evergrande said on Tuesday it will publish the audited annual results as agreed with its auditors “as soon as practicable” after audit procedures have been completed.

The company explained that it will not be able to complete audit procedures on time, because the auditor added a large number of additional audit procedures this year due to drastic changes in the company’s operational environment since the second half of last year, coupled with the effect of the Covid-19 outbreak.

The company will issue a separate announcement to inform holders of its securities and potential investors of the expected results release date, according to Tuesday’s announcement.

The real estate development company is based in Shenzhen, China.

Ukraine strains

Ukraine’s MHP SE and MHP Lux SA are soliciting holder consents to amend the indenture governing the $500 million of 7¾% notes due 2024 (Cusip: 55302TAD7), the $550 million of 6.95% notes due 2026 (Cusip: 59318YAA6) and the $350 million of 6¼% notes due 2029 (Cusip: 59318YAB4), according to a notice.

The 7¾% were issued by MHP SE, and the 6.95% and 6¼% notes were issued by MHP Lux.

MHP is seeking the consent of holders of the outstanding notes to implement an extension of the grace period, following which an event of default will arise from non-payment interest in early 2022.

The company said that as a result of the ongoing Russian war in Ukraine, it has “experienced a number of significant disruptions and operational issues within its business while undertaking extensive and continuous humanitarian efforts.”

The company noted that, in over 16 years in the bond market, it has previously always complied with its obligations, even in 2015 when it was the only public eurobond market borrower from Ukraine that fully fulfilled its obligations to international creditors, despite the ongoing Russian military aggression in the country.

However, the issuer did not pay interest on the 2029 notes that was due on March 19, constituting a default on that series and an event of default if the payment is not made within 30 days of the due date. The company said it is also unlikely to pay interest on the 2026 and 2024 notes due on April 3 and May 10, respectively, which would give rise to similar defaults and events of defaults under those series.

The consent solicitation seeks to help MHP preserve its liquidity in a very turbulent and uncertain environment, which will assist it in ensuring the continuity of its business in the short, medium and long terms.

The issuer is a Kyiv, Ukraine-based agriculture-industrial company.

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