Emerging Markets: Aramco sells $6 billion notes; Indofood, Azul price; Dubai Aerospace on tap

By Rebecca Melvin

Concord, N.H., June 11 – The emerging markets debt market remained vibrant this past week despite economic crosswinds that have yet to push strong enough to create a certain economic picture going forward.

Investors are simultaneously weighing the potential for both ongoing stimulus and inflation pressures and the potential for tapering of stimulus that would generate shockwaves in the market.

The European Central Bank this week chose not to signal when it might start reducing its stimulus program and said it expects inflation to remain below its target for the foreseeable future. The uptick in inflation seen recently is considered transitory in nature.

In the meantime, issuers continue to print new paper at a strong clip. Saudi Arabian Oil Co. (Aramco) priced $6 billion in a three-part sukuk offering (expected ratings: A1//A), according to a market source.

The state-owned oil company for Saudi Arabia sold $1 billion of three-year notes at Treasuries plus 65 basis points, low to talk in the Treasuries plus 105 bps area.

The $2 billion of five-year notes came at Treasuries plus 85 bps, low to talk in the 125 bps area.

And, a $3 billion tranche of 10-year notes came at Treasuries plus 120 bps, low to initial price talk, which had them in the Treasuries plus 160 bps area.

The joint sukuk structuring agents were First Abu Dhabi, HSBC and Standard Chartered Bank.

Alinma Investment Co., Al Rajhi Capital, BNP Paribas, Citigroup, First Abu Dhabi Bank, Goldman Sachs International, HSBC, JPMorgan, Morgan Stanley, NCB Capital, Riyad Capital, SMBC Nikko and Standard Chartered Bank are the active bookrunners. And the passive bookrunners are Abu Dhabi Commercial Bank, Albilad Capital, AlJazira Capital, Alistithmar Capital, ANB Invest, BOC International, Credit Agricole CIB, Dubai Islamic Bank, Emirates NBD Capital, Saudi Fransi Capital and Societe Generale CIB.

PT Indofood Sukses Makmur Tbk. issued $1.75 billion of senior notes in two tranches (Baa3//BBB-), according to listing notices.

The company priced $1.15 billion of 3.398% senior bonds due June 9, 2031.

The company also priced a tranche of $600 million of 4.745% senior bonds due June 9, 2051.

Joint lead managers and joint bookrunners on the offering were UBS AG Singapore Branch, Deutsche Bank AG, Singapore Branch, Mizuho Securities (Singapore) Pte. Ltd., SMBC Nikko Capital Markets Ltd., DBS Bank Ltd., Mandiri Securities Pte. Ltd., Natixis Singapore Branch and Oversea-Chinese Banking Corp., Ltd.

Proceeds will be used to refinance part of the debt related to the acquisition of Pinehill Co. Ltd., according to Fitch Ratings.

Based in Jakarta, PT Indofood produces and sells consumers products in Indonesia and internationally.

And JBS SA priced a $1 billion issue of 3 5/8% sustainability-linked senior notes due Jan. 15, 2032 (Ba1/BB+/BBB-) via its JBS Finance Luxembourg Sarl unit.

The JBS notes priced at 98.913 to yield 3¾% on Tuesday. The yield printed at the tight end of yield talk in the 3 7/8% area. Initial guidance was in the low-to-mid 4% area.

Joint bookrunner and sustainability adviser Santander will bill and deliver. Joint bookrunner Barclays was also a sustainability adviser. Additional joint bookrunners were Bradesco BBI, BTG Pactual, Mizuho and XP.

The Sao Paulo, Brazil-based meat processor plans to use the proceeds to extend its debt maturity profile by refinancing shorter maturity debt and for general corporate purposes.

On a smaller scale, SPP-Distribucia AS, the natural gas pipeline company based in Bratislava, Slovakia, sold €500 million of 1% notes due June 9, 2031 (Baa2//B-) at 99.613.

The notes have a make-whole call at Bund plus 20 bps until March 9, 2031 and then a par call.

Commerzbank AG, ING Bank BV, Erste Group Bank AG and Societe Generale are the joint lead managers for the Regulation S notes.

Proceeds will be used to redeem the €500 million of 2 5/8% notes due 2021.

And for Philippine’s San Miguel Corp., a unit of the company priced $600 million 5.45% senior perpetual capital securities.

The lead managers and bookrunners for the securities are Credit Suisse (Hong Kong) Ltd., DBS Bank Ltd., Mizuho Securities Asia Ltd., Standard Chartered Bank and UBS AG Singapore Branch.

The beverage, food and packaging company based in Manila.

Azul taps the market

Even Azul SA, the Brazilian carrier, priced a chunky deal for $600 million of 7¼% five-year notes (expected rating: Caa1), according to a company news release and market sources.

The notes will be issued by subsidiary Azul Investments LLP and guaranteed by Azul and Azul Linhas Aereas Brasileiras SA.

Proceeds of the Rule 144A and Regulation S issuance will be used for general corporate purposes, including debt refinancing.

And Morocco’s OCP SA was seeing strong interest in its planned benchmark offering of U.S. dollar-denominated senior bonds due in 10 and 30 years, according to a market source.

Order books were in excess of €50 billion at the time revised guidance was released early in the week.

Barclays, BNP Paribas and JPMorgan are joint dealer managers of the Rule 144A and Regulation S deal for which investor calls commenced on Tuesday.

The company also announced an invitation to purchase for cash up to $1 billion of its outstanding $1.25 billion of 5 5/8% notes due 2024 and $1 billion 4½% notes due 2025, subject to the successful settlement of the bond offering and other conditions.

OCP is a state-run phosphate company that is based in Casablanca, Morocco.

Looking ahead, Dubai Aerospace Enterprise (DAE) Ltd. is on the calendar for next week. The company plans to price a dollar-denominated benchmark of senior unsecured notes under Rule 144A and Regulation S, according to a market source.

The company has mandated BNP Paribas, Credit Agricole CIB, Emirates NBD, J.P. Morgan and Truist Securities to organize a series of fixed-income investor calls regarding the notes offering on June 14.

The aerospace company is wholly owned by the Investment Corporation of Dubai and based Dubai, United Arab Emirates.

Meanwhile, China remained consistent with its benchmark and smaller sized dollar-denominated issuances. And Industrial Bank Co., Ltd. sold a dual-currency offering with both tranches due 2024, according a notice Thursday.

The company priced $600 million of 7/8% notes.

The company also priced a tranche of HK$2.5 billion of ¾% notes.

Both tranches are listed as part of the $5 billion medium term note program announced June 2.

The notes are being distributed via Regulation S.

Joint global coordinators for the listing are Industrial Bank Co., Ltd., Hong Kong Branch, Agricultural Bank of China Ltd., Hong Kong Branch, Bank of China, Bank of Communications, Bocom International, China Minsheng Banking Corp., Ltd., Hong Kong Branch, Chiyu Banking Corp., Ltd., Citigroup, CLSA, CMB International and Credit Agricole CIB.

In local currencies, which drew more investors in funds this past week than their hard-currency counterparts, the Dominican Republic announced the pricing of two new offerings on Wednesday. The republic priced one tranche for DOP 35,314,500,000 of 8% notes due 2028 and a second tranche of DOP 81,441,800,000 8 5/8% notes due 2031. The proceeds of the notes are being used to fund a related tender offer.

Local outdoes hard currency

EPFR, the data-tracker, reported that the collective performance of emerging markets bond funds has rebounded from their late March low, and the quarter-to-date show they narrowly lag balanced funds.

The latest week saw flows into this group hit a nine-week high. Funds with local currency mandates attracted more fresh money than their hard currency counterparts by a 3-to-2 margin. At the country level, Colombia bond funds snapped a six-week outflow streak; flows into Turkey bond funds hit a 10-week high; and China bond funds extended a current inflow streak to 58 weeks an $29 billion.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.