Emerging Markets: Morocco prices $3 billion notes; Ukraine adds to 2033 notes; Laos eyes deal

By Rebecca Melvin

New York, Dec. 11 – Sovereign issuers continued to tap the bond market this past week, albeit at a slower pace, and funds continued to flow into both emerging market local and hard currency funds as the 2020 year-end draws closer.

The Kingdom of Morocco priced a rare dollar deal on Wednesday, which included $3 billion of notes in seven-, 12- and 30-year tranches (BBB-/BB+).

Ukraine was pricing a $500 million tap of its 7.253% senior notes due March 15, 2033 on Friday, according to a market source.

The sovereign, represented by its Minister of Finance, priced the original $2 billion issue in July. Pricing of the tap was guided to yield 6.2% to 6¼% from initial price thoughts for yield in the area of 6.4%, and order books were in excess of $1.5 billion at the time guidance was released.

Meanwhile, Airport Authority Hong Kong issued $1.5 billion of perpetual capital securities, including a $750 million tranche of a series A securities, which has a 2.4% initial distribution rate, and a $750 million tranche of series B securities, which has a 2.1% initial distribution rate.

The issuer is a statutory body corporate established in Hong Kong under the Airport Authority Ordinance.

Another issuer with sovereign connections was China Huaneng Group Co., Ltd. subsidiary China Huaneng Group (Hong Kong) Treasury Management Holding Ltd., which sold $1 billion of guaranteed perpetual securities in two parts.

China Huaneng sold $500 million of securities at par with an initial distribution rate of 2.85%.

It sold $500 million of securities at par with an initial distribution rate of 3.08%.

Bank of China, JPMorgan and Mizuho Securities are joint global coordinators, as well as joint bookrunners and joint lead managers together with Citigroup, BOC International, CMB Wing Lung Bank Ltd., CCB International, Industrial Bank Co., Ltd. Hong Kong Branch and CMBC Capital.

Based in Beijing, Huaneng develops, constructs and operates large power plants in China.

Meanwhile, emerging markets bond funds posted their 10th consecutive inflow, with both hard and local currency funds absorbing more than $1 billion, according to the EPFR, a data tracking firm.

Flows were also evenly split between funds with sovereign and corporate mandates. EM High Yield Bond Funds posted their biggest inflow since the first full week of June, and Frontier Markets Bond Funds extended their longest run of inflows in over nine months, but Sharia Bond Funds recorded their seventh outflow in the past nine weeks.

Among corporate issuers, NWD Finance (BVI) Ltd. priced $700 million of senior perpetual capital securities guaranteed by New World Development Co. Ltd., according to a company announcement.

The securities have an initial distribution rate of 4.8%.

It is expected they will be listed on the Stock Exchange of Hong Kong Ltd. on Thursday.

Credit Suisse, HSBC and UBS are the joint global coordinators joint bookrunners and joint lead managers on the Regulation S issue.

New World Development is a Hong Kong-based conglomerate.

Mexico’s Fibra Prologis sold $375 million of long-term trust certificates in three tranches, including a green bond, according to a market announcement.

The company priced $125 million of 4.12% certificates due 2028, $125 million of 4.12% certificates due 2030 and $125 million of 4.12% green certificates due 2032.

Casa de Bolsa BBVA Bancomer, SA de CV, Grupo Financiero BBVA Bancomer and HSBC Casa de Bolsa, SA de CV and Grupo Financiero HSBC were the bookrunners.

Proceeds will be used to repay term loans that are due in 2022 and 2023.

Based in Mexico City, Fibra Prologis owns and operates class A industrial real estate in Mexico.

Olam prices green notes in yen

Olam International Ltd. issued ¥7 billion of 2.05% five-year sustainability-linked notes, the company announced on Friday.

The financing represents the first such issuance in Asia excluding Japan, the company said.

The notes issued under Olam’s $5 billion euro medium-term note program were sold to the Development Bank of Japan via private placement.

They feature a tiered, one-time step-down coupon adjustment based on the company achieving its sustainability performance targets, which include improved farming, food systems and community outcomes.

Australia and New Zealand Banking Group Ltd. acted as manager, sustainability coordinator and swap dealer for the transaction.

The proceeds are earmarked for Olam’s and its subsidiaries’ working capital purposes and for general corporate purposes, including capital expenditure and potential acquisitions.

Olam is a food processing company based in Singapore.

Looking ahead

Looking ahead, Lao People’s Democratic Republic (Laos) is planning a possible international offering of new notes in December, according to a general announcement.

If the offering is for at least $150 million, Laos will use part of the proceeds to fully redeem its outstanding $150 million 6 7/8% notes due 2021.

If the company moves forward with the issue, the term will be up to five years.

Proceeds would be used to replace domestic and overseas debts, to purchase raw materials, to replenish working capital and for project construction.

The company intends to seek a listing with the Stock Exchange of Hong Kong Ltd.

Morocco goes for dollar deals

Morocco brought a triple tranche of U.S. dollar notes this past week, which was the first time in several years. In the interim the sovereign has been tapping bonds denominated in euros, with the latest offering priced in September.

Morocco priced a $750 million 2 3/8% seven-year notes priced at 99.763 to yield 2.412%, or a yield spread of mid-swaps plus 175 basis points. The pricing was tight to guidance for yield in the mid-swaps plus 195 bps area, which was tightened from initial price talk in the mid-swaps plus 215 bps area.

The $1 billion of 3% 12-year notes priced at 98.57 to yield 3.043%, or a yield spread of mid-swaps plus 200 bps. The pricing was tight to guidance for yield of mid-swaps plus 225 bps area, which was tightened from initial talk of mid-swaps plus 250 bps area.

The $1.25 billion 30-year notes priced at par for a 4% yield, or a spread of mid-swaps plus 261.3 bps. Pricing was tight to guidance for a 4¼% area yield and from initial talk in the area of 4½%.

Barclays, BNP Paribas, JPMorgan and Natixis were joint lead managers of the deal, which was marketed under Rule 144A and Regulation S.

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