Emerging Markets: Galaxy Pipeline prices triple tranches; Etihad, Millicom, Gazprom price

By Rebecca Melvin

New York, Oct. 30 – The emerging markets primary market calmed down somewhat from the previous week’s spike in activity. This past week Galaxy Pipeline Assets Bidco Ltd. priced a blockbuster $4 billion deal of senior secured notes in three tranches (Aa2//AA) on Tuesday.

The United Kingdom-based debt, refinancing and acquisitions entity is focused on the Middle East, and there were a number of other deals pricing for that region this past week.

Abu Dhabi’s Etihad Airways priced $600 million of five-year Islamic bonds (//A), or sukuk, via its Unity 1 Sukuk Ltd. subsidiary. The paper priced at par to yield 2.394%.

The bookrunners were Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, Standard Chartered Bank and Abu Dhabi Commercial Bank, and the proceeds will be used by the United Arab Emirates airline to finance and/or refinance new or existing projects in line with the company’s transition finance network.

Sharjah Sukuk Programme Ltd., acting on behalf of the Government of Sharjah, priced a $250 million reopening of its 3.234% sukuk due Oct. 23, 2029 (BBB) at 103.822 to yield 2¾%, or 203.6 basis points over mid-swaps.

Dubai Islamic Bank, HSBC, Sharjah Islamic Bank and Standard Chartered Bank were managers of the deal.

The new notes will be added to form one series with the original $750 million 10-year sukuk, which priced in October 2019.

Elsewhere, Millicom International Cellular SA issued $500 million of 4½% senior notes due 2031 (Ba2//BB+) in a private offering.

Proceeds from the Rule 144A and Regulation S offering will be used, along with existing cash, to redeem the company’s 6% senior notes due 2025.

The 6% notes due 2025 will be redeemed on Oct. 29 at 103 plus accrued interest.

Millicom is a Luxembourg-based provider of cable and mobile services to customers in Latin America and Africa.

Russia’s PJSC Gazprom subsidiary Gaz Finance plc placed $2.58 billion equivalent of perpetual subordinated series 5 notes (Ba1/BB/BB+) in two currencies, according to notices with the London Stock Exchange.

The notes are non-callable for 5.25 years.

The €1 billion euro tranche priced at a spread of 190 bps over the benchmark security, and the $1.4 billion dollar tranche priced at 180 bps over the benchmark.

The company said the deals, which priced under the company’s €30 billion loan participation note issuance program, saw investor demand that exceeded $7.4 billion. In the final order book, European investors accounted for 33% of the dollar issue and 52% of the euro issue.

Bank GPB International SA, J.P. Morgan Securities plc, Credit Agricole CIB and Sberbank CIB (UK) Ltd. were joint lead managers and bookrunners of the Rule 144A and Regulation S notes, which are expected to be listed on Euronext Dublin exchange.

The proceeds will be used for general corporate purposes including debt refinancing.

The oil and natural gas producer is based in Moscow.

China deals

China was active as usual, but not as busy as sometimes.

China Development Bank issued $1.5 billion in two tranches of notes including $1 billion of 1% five-year notes and $500 million of 1 5/8% 10-year notes (A+), according to regulatory notices on Tuesday.

Bank of China Ltd., Agricultural Bank of China Ltd. Hong Kong Branch, China Construction Bank (Asia) Corp. Ltd., Bank of Communications Co., Ltd. Hong Kong Branch, Australia and New Zealand Banking Group Ltd., DBS Bank Ltd., Hongkong and Shanghai Banking Corp. Ltd., Mizuho Securities Asia Ltd., MUFG Securities Asia Ltd. and Standard Chartered Bank are the bookrunners.

The bank is based in Beijing.

Sinochem Offshore Capital Co. Ltd. priced $1 billion of securities in two tranches, $500 million of guaranteed notes due 2025 and $500 million of guaranteed subordinated perpetual securities, both guaranteed by Sinochem (Hong Kong) Group Co. Ltd., according to a Stock Exchange of Hong Kong Ltd. listing notice.

The $500 million of notes due 2025 priced with a 1 5/8% coupon.

The $500 million of subordinated guaranteed perpetual securities priced with a 3% coupon.

Standard Chartered Bank and Citigroup are joint global coordinators and joint active bookrunners. Bank of China, ANZ, DBS Bank Ltd., Credit Agricole CIB, J.P. Morgan, UBS and ICBC (Asia) are joint active bookrunners.

The issuer is a food-processing company based in Beijing.

Finally, Rongshi International Finance Ltd. is listing a $3 billion medium term note program guaranteed by State Development & Investment Corp. Ltd. on the Hong Kong Stock Exchange, according to a notice.

The program is expected to become effective on Friday.

ICBC, BOC International, DBS Bank Ltd. and J.P. Morgan are arrangers and dealers of the notes program.

Taiwan deal

Foxconn (Far East) Ltd., a subsidiary of Hon Hai Precision Industry Co., Ltd., priced $1.4 billion of notes in two tranches, according to a Singapore Stock Exchange notice.

The company priced $800 million of five-year notes with a fixed coupon of 1 5/8% and $600 million of 10-year notes with a fixed coupon of 2½%.

Merrill Lynch (Asia Pacific) Ltd., Citigroup Global Markets Ltd., HSBC and J.P. Morgan Securities plc are the lead managers and bookrunners of the Regulation S deal.

Hon Hai Precision is a Tu-cheng, Taiwan, manufacturer of computer connectors, cable assemblies and enclosures.

Galaxy Pipeline deal

The three tranches priced by Galaxy Pipeline revealed a progression that was in line with the terms affixed to notes of various maturities. A $1.1 billion tranche of 1¾% notes due 2027 (series A) priced at par with a spread of 141.7 bps over Treasuries. The weighted average life of the bond is 4.05 years. That compared to talk for a weighted average life of four to five years and yield in the area of 1 7/8%.

The $1.55 billion of 2 5/8% notes due 2036 (series B) priced at par for a weighted average life of 11.49 years. That compares to talk for a weighted average life of 11 to 12 years and yield in the 2¾% area.

The $1.35 billion of 3¼% notes due 2040 (series C) priced at par for a yield to maturity of 168.3 bps over Treasuries and a weighted average life of 17.98 years. That compared to talk for a weighted average life of 17 to 18 years, which was talked to yield in the area of 3 3/8%.

The Rule 144A and Regulation S deal was marketed by Citigroup and HSBC as joint global coordinators and joint bookrunners together with joint bookrunners and joint lead managers BNP Paribas, FAB, Mizuho, MUFG, Standard Chartered Bank, ADCB, Credit Agricole CIB, ENBD Capital, Natixis, Samba, Santander, SMBC Nikko, Societe Generale, CaixaBank and DBS.

Listing on the Irish Stock Exchange plc and trading a Euronext Dublin is planned.

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