Emerging Markets: Energean, PTT Global Chemical, Vedanta price large deals in lighter week

By Rebecca Melvin

New York, March 12 – Rate volatility appeared to zap the emerging markets primary bond issuance and bond fund flows this past week. Notable issuers among the smattering of new deals that priced across the various regions in the second week of March were large industrials.

Energean plc announced subsidiary Energean Israel Finance Ltd. priced $2.5 billion of senior secured notes in four equal parts due 2024, 2026, 2028 and 2031 on Wednesday.

Each of the $625 million tranches priced at par. They are non-callable and have fixed rates of 4½%, 4 7/8%, 5 3/8% and 5 7/8%, respectively.

J.P. Morgan Securities plc, Morgan Stanley, BNP Paribas, Credit Suisse, ING and Natixis were bookrunners of the Rule 144A and Regulation S notes.

The proceeds will be used to repay outstanding debt under the company’s and its subsidiaries’ $1.45 billion project finance facility and a $700 million term loan.

Proceeds will also be used to replace existing undrawn amounts under those facilities.

Energean is the leading independent, gas-focused E&P company in the Eastern Mediterranean, based in London.

Thailand-based petrochemical PTT Global Chemical PCL priced $1.25 billion of notes in two tranches due 2031 and 2051.

Its $700 million tranche of 2.98% notes due March 18, 2031 priced to yield Treasuries plus 160 basis points. Pricing came tight to initial talk for yield of Treasuries plus 200 bps area.

Ans its $550 million tranche of 4.3% notes due March 18, 2051 priced to yield Treasuries plus 210 bps. Pricing came tight to initial talk for yield of Treasuries plus 250 bps area.

ANZ, BofA, Citigroup, MUFG and SCB were bookrunners of the transaction.

The petrochemical and refining company is based in Bangkok.

Minerals, oil and gas-company Vedanta Resources Finance II plc issued $1.2 billion of 8.95% bonds due March 11, 2025.

Citibank NA, London Branch is the principal paying agent, and Barclays Bank plc, Credit Suisse (Hong Kong) Ltd., Deutsche Bank AG, Singapore Branch, J.P. Morgan Securities plc and Standard Chartered Bank are the lead managers and bookrunners.

Vedanta Resources is a London-listed natural resources company that produces aluminum, copper, zinc, lead, silver, iron ore, oil, gas and commercial energy. Vedanta has operations in India, Zambia, Namibia, South Africa, Ireland, Liberia, Australia and Sri Lanka.

The Republic of Latvia was a rare sovereign issuer this past week. It priced €1.25 billion 0% 10-year notes at 98.956 to yield 0.105%, or mid-swaps plus 9 bps on Wednesday, according to a market source.

Pricing came tight to guidance in the mid-swaps plus 12 bps area following initial price talk in the mid-swaps plus 15 bps area.

The order books were €2.8 billion at the time the deal was launched.

Barclays, BNP Paribas and Credit Agricole were lead managers for the Regulation S deal.

Peru’s InRetail Pharma SA has priced $600 million 3¼% notes due March 22, 2028 (Baa3//BB+) at par to yield 205.7 bps over Treasuries, according to market sources.

Pricing was tight to initial talk for yield in the mid to high 3% area range.

Credit Suisse, Citigroup and Santander were the bookrunners for the Rule 144A and Regulation S transaction, for which the proceeds will be used to refinance existing debt.

InRetail is the pharmacy and supermarket division of Intercorp Peru, a conglomerate based in Lima.

Bank Muscat SAOG priced $500 million 4.75% notes due 2026, according to market sources.

Pricing for the Regulation S deal came below initial price thoughts of 5% to 5 1/8%.

Bank ABC, Bank Muscat, Citi, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, JPMorgan, Mizuho, MUFG and Standard Chartered Bank were bookrunners for the Regulation S-only notes.

The paper is being issued under the bank’s euro medium-term note program and will be listed on the Irish Stock Exchange.

The financial services company is based in Muscat, Oman.

Outflow hits funds

With the new U.S. stimulus package for more than $1.9 trillion and the prospect of another wave of U.S. sovereign debt hitting markets, fixed-income investors took a step back in early March, EPFR bond fund tracker said in a note published on Friday.

Those funds tracked by EPFR posted only their second outflow since the second week of the second quarter of 2020. It was their biggest in just under a year, with the headline number boosted by the closing of several global bond funds tied to finance company Greensill Capital, which collapsed this month.

Emerging markets bond funds recorded their biggest outflow since late first quarter of last year. Hard currency funds accounted for the bulk of those outflows. Retail flows were negative for the first time since mid-September. But at the country level, China bond funds continued to attract fresh money, EPFR said. The inflow for China came despite developer China Fortune Land Development’s recent default and flows into South Africa bond funds hit a 34-week high.

The week ending March 10 saw EPFR-tracked bond funds post their biggest outflow in nearly a year as “concerns about U.S. bond yields and the liquidation of funds linked to bankrupt supply chain finance company Greensill Capital chased over $15 billion from this fund group,” the data tracker said.

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