Emerging Markets: Canpack prices $800 million notes; UAE brings bonds; Kookmin on tap

By Rebecca Melvin

Concord, N.H., Oct. 8 – Canpack SA started the ball rolling in the emerging markets debt primary market this past week when the high-yield credit priced an $800 million issue of eight-year notes on Monday at the wide end of talk.

South Korea’s KB Kookmin Bank bookended the week on Friday with a mandate for a euro-denominated benchmark of five-year green covered bonds.

In between, the space saw a range of sovereign and corporate issuers. United Arab Emirates planned a bond market debut with a dollar-denominated benchmark of notes in three parts due 2031, 2041 and 2061. Abu Dhabi and Dubai have been issuers but not the UAE federal government.

Reuters reported that the sovereign ultimately priced $4 billion of the notes, including $1 billion of 10-year notes, $1 billion of 20-year notes and $2 billion of 40-year notes. The UAE’s ministry of finance did not immediately respond to Prospect News’ request for pricing details.

HSBC Bank plc and HSBC Bank (Taiwan) were managers of the UAE deal.

The Republic of Korea also waded into the market, which has been rocked by volatility so far in October. Korea priced a dual-tranche offering of €700 million of five-year green notes and $500 million of 10-year notes.

The zero-coupon green notes priced at 100.265.

The 1¾% dollar notes priced at 99.827.

BofA Securities Inc., Citigroup Global Markets Inc., Credit Agricole CIB, Hongkong and Shanghai Banking Corp. Ltd., J.P. Morgan Securities LLC and Korea Development Bank were joint bookrunners for the notes, which are not callable.

Funds from the euro-denominated notes will be allocated to green projects. Proceeds from the dollar-denominated notes will become part of a foreign exchange stabilization fund.

Volatility hit the market during the first week of October. In the United States, uncertainty regarding the country’s debt ceiling and the prospect of a potential default worried investors. Authorities in China were scrambling to limit the range of damage that property company Evergrande’s debt crisis my cause, and central bankers wrestled with the tradeoff of economic growth and rising prices.

EPFR reported that emerging markets bond funds experienced redemptions for the third time in three weeks. Meanwhile, high-yield bond funds posted their first outflow since the second week of July.

Inflationary pressures this past week spurred interest rate hikes among central bankers in New Zealand, Poland, Mexico and Colombia.

Nevertheless, a pair of gold miners priced deals the past week. Endeavour Mining plc priced $500 million 5% five-year senior notes on Wednesday. The notes had been talked at 5½% to 5 5/8%, which was tightened from early guidance in the high 5% area.

Global coordinator Citigroup will bill and deliver for the Rule 144A and Regulation S offering. HSBC, ING and SG are joint bookrunners. Barclays, BMO and Macquarie are passive bookrunners.

The notes come with two years of call protection.

The George Town, Cayman Islands-based miner has operations principally in Africa.

The company plans to use the proceeds plus balance sheet cash to pay off its bridge loan and revolver.

Another gold mining operation, Polyus Finance plc, which is based in London with mines in Russia and Kazakhstan, priced $700 million seven-year senior unsecured notes on Thursday at par, according to a notice.

The notes are guaranteed by PJSC Polyus and JSC Polyus Krasnoyarsk.

J.P. Morgan Securities plc, Gazprombank, Raiffeisen Bank International, Renaissance Capital, SberCIB and VTB Capital are managers of the deal, for which proceeds will be used to repurchase the company’s existing backed senior notes.

On Wednesday, Polish lender, Bank Gospodarstwa Krajowego, priced €500 million 3/8% seven-year notes. The deal was reoffered at 99.608 to yield 0.432%, or a spread over mid-swaps of 45 basis points.

The Regulation S notes are guaranteed by the State Treasury of the Republic of Poland and represent a drawdown under BGK’s €15 billion medium-term note program.

The bookrunners are Citi, Commerzbank AG, ING, PKO Bank Polski and Santander. The proceeds are earmarked for a Covid-19 response fund.

Also on Wednesday, the owner and operator of LNG infrastructure, Golar LNG Ltd. priced a $300 million issue of four-year senior notes at par to yield 7%.

Pricing came at the tight end of both yield talk and initial guidance: The deal attracted a mix of Scandinavian high-yield investors, U.S. hedge funds and emerging markets accounts, sources said.

Bookrunners DNB Markets and Pareto Securities were the global coordinators. Lead managers were Danske Bank and Nordea Markets.

Proceeds will be used to refinance the company’s outstanding convertible bonds due February 2022 and for general corporate purposes.

Canpack drives by with notes

Canpack priced its $800 million of eight-year notes at par to yield 3 7/8% in a Monday drive-by. The yield printed at the wide end of yield talk in the 3¾% area and in line with initial guidance in the high 3% to 4% area.

Wells Fargo Securities LLC was the left bookrunner and joint bookrunners were BNP Paribas, Citigroup, HSBC and ING.

The Krakow-based can manufacturer plans to use proceeds to build a new plant in Muncie, Ind., and to expand its plant in Olyphant, Pa., as well as to fund potential growth projects.

Kookmin joins the calendar

The Korean lender said on Friday that it plans to hold an investor conference call next Tuesday, with a green covered bond transaction backed by Korean residential mortgages to follow, subject to market conditions.

BNP Paribas, Citigroup, Credit Suisse, ING, JPMorgan and KB Securities are joint bookrunners and joint lead managers of the Regulation S deal.

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