Emerging Markets: Gabon, Albania price 10-year notes; Uzbekneftegaz issues; Warba on tap

By Rebecca Melvin

Concord, N.H., Nov. 19 – A pair of small sovereigns and a pair of lenders with deals in the emerging markets debt market this past week drew attention amid economic cross currents and as market players eyed the U.S. Thanksgiving holiday next week.

The Gabonese Republic priced $800 million 7% amortizing notes due 2031 (expected ratings: Caa1//B-) at par, according to an offering circular published on Friday; and Republic of Albania, through its Minister of Finance and Economy, priced €650 million of 3½% senior notes due 2031 (B1/B+) at 97.947 to yield 3¾%, or a spread over mid-swaps of 357.4 basis points, according to a pricing term sheet on Thursday.

Gabon’s notes will be repaid in three instalments on Nov. 24 of 2029, 2030 and 2031.

Gabon launched concurrent tender offers for its outstanding $1.5 billion 6 3/8% amortizing notes due 2024 and the $700 million 6.95% notes due 2025. Proceeds of the new issue will be used to fund the tender offers.

Among corporate issuers, there was solid representation from the Central and Eastern Europe, Middle East and Africa region this past week.

Prospect News’ data also showed Uzbekistan’s state-owned oil and gas company, JSC Uzbekneftegaz, issued $700 million of 4¾% seven-year senior notes (BB-/BB-) at par.

Proceeds will be used to refinance existing debt.

Alfa Bond Issuance plc priced $400 million of perpetual non-call 5.5-year fixed-rate additional tier 1 loan participation notes guaranteed by Moscow-based lender JSC Alfa-Bank, according to a London Stock Exchange notice on Wednesday.

The company had planned to price at least $300 million of the notes, according to an announcement on Tuesday.

In addition, CEEMEA issuer Warba Bank KSCP joined the calendar. It said it plans to sell new dollar-denominated tier 1 capital certificates to fund a $250 million tender offer, according to an announcement.

The certificates will be issued by the commercial bank’s Warba Tier 1 Sukuk (2) Ltd. subsidiary.

For Asia, Singapore’s financial services group DBS Group Holdings Ltd. sold $1 billion of three-year notes in two parts on Tuesday. The deal included a $300 million floating-rate tranche with a coupon based on SOFR plus 30 bps.

DBS also priced $700 million of 1.169% notes with a spread over Treasuries of 30 bps, lower than talk in the Treasuries plus 50 bps area.

The financial services group is based in Singapore.

In addition, China’s SF Holding Investment 2021 Ltd. priced $1.2 billion of notes in three parts, including $400 million 2 3/8% five-year notes with an issue price of 99.738; $300 million of 3% seven-year notes at an issue price of 99.912; and $500 million of 3 1/8% 10-year notes at an issue price of 99.075.

Based in Xinzhou, China, SF Holding provides logistics, order tracking, supply chain management, warehousing and other services.

CNCB Investment, a subsidiary of Hong Kong-based China Citic Bank Corp., priced $500 million of 1¾% guaranteed bonds due 2024 (BBB), according to a listing notice with an appended offering circular on Thursday.

The bonds will be guaranteed by a branch of the parent company, CNCB (Hong Kong) Investment Ltd.

Finally, representing Latin America, Canacol Energy Ltd., a Calgary, Alta.-based natural gas exploration and production company with operations focused in Colombia, announced it priced $500 million of 5¾% senior notes due 2028.

The Rule 144A and Regulation S notes will be guaranteed by some subsidiaries.

Canacol intends to use proceeds primarily to refinance its outstanding 7¼% senior notes due 2025 under a tender offer announced on Nov. 8, to refinance some other existing debt and for general corporate purposes, including capital expenditures.

By replacing the 2025 notes, Canacol will benefit from a lower interest rate, an indenture that will contain less restrictive covenants, a deferral of the maturity date of its most significant debt by three years and additional liquidity to be used towards capital expenditures.

In addition, European and North American units of Brazil-based meat producer JBS SA plan to price sustainability-linked senior notes (expected ratings Baa3/BB+/BBB-) on Tuesday, according to market sources.

JBS Finance Luxembourg Sarl plans to price $1 billion of notes due Jan. 15, 2027.

Initial talk is in the Treasuries plus 175 bps area.

The notes are covered by a make-whole call until one month prior to maturity, when they become callable at par.

Bookrunner Santander will bill and deliver for the five-year notes, leading a syndicate of bookrunners that includes Banco Bradesco, BTG, Mizuho, Barclays, BMO and RBC.

Proceeds will be used to extend the company's debt maturity profile by refinancing shorter maturity debt and for general corporate purposes.

JBS USA Lux SA, in conjunction with JBS USA Food Co. and JBS USA Finance Inc. are selling $1 billion of notes due May 15, 2032.

Initial guidance is in the Treasuries plus 180 bps area.

Proceeds will be used to redeem all of JBS USA Food’s 7% senior notes due 2026.

Tranche sizes of the Rule 144A and Regulation S deal will not grow.

Sustainability targets include the company's emissions based on linear progress required in years 2025 to 2030.

There is a one-time 25-bps coupon step-up that would take effect in November 2027 if progress thresholds in the sustainability targets are not met.

Economic cross currents

On Friday, the broader markets turned mixed as investors showed more caution ahead of the pause seen next week in U.S. markets during the Thanksgiving holiday and amid unwelcome news of new Covid-19 restrictions in Europe as cases tick up there and in some regions of the United States. In Austria, a nationwide lockdown was called to begin next week as the disease continues to beset the outlook for global economic recovery.

Investors showed restraint when it came to stretching for yield to offset rising prices. Flows into high-yield bond funds were a quarter of the previous week’s total and emerging markets bond funds saw their three-week run of inflows come to an end, according to data-tracker EPFR.

The perception that the U.S. Federal Reserve and Bank of England will not be able to put off rate hikes much longer weighed on the emerging markets debt, EPFR said in its weekly update published on Friday.

There were some signs of lingering risk appetite, however, with frontier markets bond funds rebounding from the biggest outflow since early March to post a small inflow and Turkey bond funds shrugged off the drag from the Turkish government’s unorthodox monetary policy.

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