Emerging Markets: Deals over $1 billion, crossover issues come to market; green debt popular

Chicago, Aug. 7 – Emerging markets issuance in the first week of August was active with three deals over $1 billion coming to the market, green deals gaining in popularity and two deals with crossover appeal to high-yield investors coloring the week.

State Grid Corp. of China’s dual-currency megadeal in four parts was listed during the week. The heavily oversubscribed offer included $1.45 billion of dollar-denominated tranches and €1.6 billion from two other parts.

In a recent crossover deal that interested high-yield accounts, Israel’s Leviathan Bond Ltd. priced $2.25 billion of senior secured bullet notes.

China Construction Bank Corp. Hong Kong Branch sold $1.2 billion in two tranches, marketed as a green deal from the Beijing-based lender.

State Grid

State Grid Corp. of China’s four-part dual currency deal was met with robust demand. The dollar-denominated tranches were oversubscribed to the tune of $14 billion, and the euro-denominated tranches had orders for €6.3 billion across both parts.

The company sold a $300 million tranche of 1% senior guaranteed notes due 2025, a $1.15 billion tranche of 1 5/8% senior guaranteed notes due 2030, a €1 billion tranche of 0.797% senior guaranteed notes due 2026 and a €600 million tranche of 1.303% senior guaranteed notes due 2032.

The company pointed out that the deal was uniquely weighted to longer-term notes and that the euro-denominated components were part of a growing opening up of the European capital market to Asian issuers.

The Regulation S issue was marketed in an online roadshow with 100 institutions participating.

Crossover deals

Israel’s Leviathan, in a deal that may have partially grabbed the attention of high-yield accounts through Houston-based Noble Energy, Inc.’s involvement with Israeli companies in the special purpose vehicle set up for a natural gas production field off of Israel’s coast, priced $2.25 billion secured notes in four tranches on Tuesday.

Fitch Ratings cited the risks of the deal as two-fold, which the agency rated as BB.

According to the rating news release, the two largest offtakers, Dolphinus Holdings Ltd. in Egypt and National Electricity Production Company (Nepco) in Jordan were rated below investment grade, and the certainty of contract renewal was low.

Additionally, the structure of the deal, with two bullet maturities, means that the issuer will be able to partially deleverage over time, but there is “a degree of refinancing risk” for the project.

Melco Resorts Finance Ltd. also crossed again into high-yield territory with an add-on to its recently priced 5¾% senior notes due 2028.

The Macau-based gaming and resort company sold $500 million of the notes in July and then an upsized $350 million add-on during the most recent week.

Green issuance

Green and social bond issuance is on the rise, and emerging markets is not immune to the trend.

In 2019 the global green market had its first month with over $10 billion of issuance in May, since Prospect News started tracking the deals in 2011.

October 2019 hit nearly $12 billion. And, now in 2020 the market has crossed the threshold four times including this August, with only seven calendar days in the books.

August green issuance is already at $11.56 billion for the month, and recent emerging markets issues have bolstered the numbers.

In terms of size, China Construction Bank Corp. Hong Kong Branch’s $1.2 billion two-part offering led green emerging markets issuance for the week.

CCB was the first issuer of a sustainability bond in 2018 to list on the London Stock Exchange International Securities Market, according to a stock exchange press release.

The bank has, through its branches, issued ESG notes in the past few years.

This issue was marked to be listed on the Stock Exchange of Hong Kong Ltd. beginning on Aug. 5.

Yuzhou Group Holdings Co. Ltd. sold $300 million of 7.85% green senior notes due 2026, with pricing on Wednesday.

The company claimed that it would refinance eligible green projects with environmental benefits that align with green bond principles with the proceeds from the notes.

In Eastern Europe NBT’s East Renewable AB listed €75 million of green notes with a 13½% coupon.

East Renewable develops renewable energy in Ukraine but is actually based in Norway.

NBT has been issuing with those double-digit coupons for at least nearly a decade, and the high coupon comes with some risk. The 14% notes due in 2013 were extended by two years with interest paid in kind in 2015 after some contention about whether the notes had been in default.

Korea South-East Power Co., Ltd. sold $300 million 1% green notes due 2026. The notes were sold Aug. 3.

According to Moody’s Investors Service, proceeds will be used “to fund or refinance existing and future debt for eligible green and social projects, including the development of renewable power sources, pollution prevention and control, terrestrial and aquatic biodiversity conservation, green buildings, small- and medium enterprise financing and microfinance, employment generation and socioeconomic advancement and empowerment.”

On deck is CPI Property Group’s Hungarian unit CPI Hungary Investments Kft.’s anticipated local-currency offering for HUF 30 billion, roughly equivalent to over $100 million.

The notes are being issued under the parent and guarantor’s green bond framework.

And, in another local-currency ESG offering Bank of the Philippine Islands wrapped a PHP 21.5 billion offering of Covid action response bonds. The notes were more than seven times oversubscribed with the issuer ending the offering for the CARE bonds early.

© 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.