Emerging Markets: MENA deals, Kernel, Lojas Americanas price; Asia sees stronger primary

By Rebecca Melvin

New York, Oct. 23 – Action in the emerging markets primary market heated up this past week, with activity across a broad swathe of regions but limited to corporate issuers with the exception of the Sultanate of Oman, which was talking a large deal of U.S. dollar-denominated notes, according to Prospect News’ data.

For the Middle East and Africa region, a pair of banks and a utility company priced new notes. Latin America’s Lojas Americanas SA priced an upsized $500 million of five-year senior notes, and Central and Eastern Europe’s Kernel Holding SA priced $300 million of seven-year notes that are non-callable for three years. Meanwhile Asia, especially China, saw stronger volume.

For the MENA region, the Arab National Bank completed its offering of a 10-year sukuk (Baa3//BBB-) for $750 million. The coupon rate is 3.326% for the first half of the sukuk, with a reset slated on Oct. 28, 2025.

The Regulation S notes will be listed on the London Stock Exchange and are non-callable for the first five years.

J.P. Morgan Securities plc, HSBC and Arab National Investment Co. JSC were managers of the offering from the Riyadh, Saudi Arabia lender.

Also for MENA, Investment Corp. of Dubai priced $600 million of long five-year bonds at par with a coupon of 3.223%, or a mid-swaps plus 275 basis points yield.

Citigroup, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, JPMorgan and Standard Chartered Bank were joint lead managers and bookrunners of the sovereign wealth fund’s Regulation S deal.

United Arab Emirates’ utility, National Central Cooling Co. PJSC, or Tabreed, priced $500 million 2½% seven-year coupon bonds (ratings: Baa3//BBB). The issuance was oversubscribed almost 5 times its initial size of $400 million.

The demand allows Tabreed to tighten pricing to achieve a final coupon of 2½% and to increase the size of the final bond to $500 million.

The seven-year bond was particularly well received by international investors, who accounted for 90% of the final geographical allocation, with 49% from Europe, 21% from Asia and 20% from offshore U.S. funds.

J.P. Morgan Securities plc, HSBC and Commercial Bank of Dubai were bookrunners of the deal.

Oman was talking its multi-tranche deal only days after a stiff downgrade from S&P. But it appeared to trim the deal down to two tranches from three, leaving the paper with a three-year maturity out of price guidance. Its long-term foreign and local currency credit ratings were downgraded to B+ from BB- last week.

The seven-year notes were guided to a 6¾% to 6 7/8% yield after initial price talk in the 7% area. And the 12-year notes were guided to a 7 3/8% to 7½% yield after initial price talk in the area of 7 5/8%.

The order books for the new issues were in excess of $3.4 billion, skewed toward the seven-year tranche at the time guidance was released, the source said.

Bank Muscat, Citi, First Abu Dhabi Bank, HSBC, Natixis, Societe Generale and Standard Chartered Bank are joint lead managers and bookrunners of the Rule 144A and Regulation S deals.

S&P said its downgrade reflected the view that Oman’s public sector finances, as indicated by the net debt level, will materially weaken over the next three years, even though measures have been implemented to reduce fiscal deficits. The downgrade was partly driven by assumptions of restrained oil price growth and slow economic recovery due to the Covid-19 pandemic.

Elsewhere, JSM Global Sarl sold an upsized issue of $500 million 4¾% 10-year notes (Ba1/BB) for Brazilian retailer Lojas Americanas.

The size of the issue was upsized from $350 million.

Proceeds from the Rule 144A and Regulation S issue were slated to be used to refinance a portion of short and medium-term debt and for general corporate purposes, according to Moody’s Investors Service.

In sovereign note news, an ad hoc group of holders of Republic of Argentina debt claimed that after the country’s restructuring closed, policy actions “dramatically worsened the country’s economic crisis.”

The group said in a news release that many creditors are alarmed by Argentina authorities delivering a message that even sustainable debts will not be repaid.

The group said that instead of allowing prices to reach equilibrium and stimulate economic activity, the central bank has reinforced an exchange rate policy that promotes imports, discourages exports and has dangerously depleted reserves.

“Steps taken to force otherwise solvent Argentinean borrowers to restructure their debts have undermined basic confidence in the sanctity of contracts,” the group said.

“By delivering the message that even sustainable debts will not be repaid, Argentina’s authorities have alarmed many creditors, who are left to wonder if their sacrifices to provide a debt structure Argentina is capable of servicing were essentially meaningless in the face of a borrower that may simply be unwilling to pay.”

Asia heats up

For India, Periama Holdings, LLC issued $500 million of 5.95% notes due 2026 (Ba2//BB-), guaranteed by JSW Steel Ltd.

Deutsche Bank AG, Singapore Branch, Credit Suisse (Hong Kong) Ltd., Standard Chartered Bank, BNP Paribas, Citigroup Global Markets Ltd., Mashreqbank psc and Mizuho Securities Asia Ltd. are the bookrunners.

Periama is a Beckley, W.Va.-based coal mining, quarrying and oil extraction services company. Periama is an indirect wholly owned subsidiary of JSW Steel. The steelmaker is based in Mumbai.

Jakarta, Indonesia-based energy company Indika Energy Tbk. priced $450 million of 8¼% senior notes due 2025 (Ba3//BB-).

Korea Development Bank priced $1 billion of notes (Aa2/AA/AA-) in two parts, including $500 million of three-year notes at 99.748 with a coupon of ½% and $500 million of 5½-year notes at 99.721 with a coupon of 0.8%.

Proceeds from one of the tranches will be allocated toward financing new or refinancing existing eligible social projects, namely loans and lines of credit that provide direct or indirect financial support for small- and medium-sized enterprises and small offices or home offices adversely affected by the Covid-19 pandemic.

Proceeds from the other tranche will be used for general operations, including extending foreign currency loans and repaying maturing debt and other obligations.

For China, food delivery company Meituan priced $2 billion of senior notes in a two-tranche deal, including $750 million of 2 1/8% notes due 2025 and $1.25 billion of 3.05% notes due 2030. The 2025 notes priced at 99.877, and the 2030 notes at 99.863.

Both tranches have make-whole calls with par calls one month before the maturity date for the 2025 notes and three months prior to the maturity date for the 2030 notes.

Bank of China, Ltd., Macau Branch’s Amipeace Ltd. unit issued $900 million of notes in two tranches, according to a listing notice.

The issuer sold $400 million of 1½% notes due 2025 and $500 million of 2¼% notes due 2030.

The notes are being issued under the bank’s HK$20 billion medium-term note program and are guaranteed by the bank.

Taizhou, China-based investment company Taizhou Urban Construction and Investment Development Group Co., Ltd. sold $500 million of 2.65% senior notes due 2023 (//BBB).

Food-processing company Cofco (Hong Kong) Ltd. priced $1 billion of securities in dual tranches of 10-year notes and perpetual securities (Baa1//A), according to a Stock Exchange of Hong Kong Ltd. listing notice.

The notes were issued through Blossom Joy Ltd. and guaranteed by Cofco.

The $500 million of notes due 2030 priced with a 2.2% coupon.

The $500 million of subordinated guaranteed perpetual securities priced at par with a 3.1% coupon.

China Development Bank priced €1.25 billion 0% three-year fixed-rate notes (//A) to yield mid-swaps plus 55 bps.

China Minsheng Banking Corp. Ltd. priced $500 million of floating-rate notes due 2023 (BBB-) through its Hong Kong branch, and Agricultural Bank of China Ltd. sold $850 million of fixed-rate notes in two parts.

A tranche of $500 million of 1% notes due 2023 and a second tranche of $350 million 1.2% notes due 2025 were sold under the bank’s $15 billion medium-term note program.

© 2015 Prospect News.
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