Emerging Markets: Petrobras, CSN, Cemex, Senegal price deals; SPP-Distribucia joins calendar

By Rebecca Melvin

Concord, N.H., June 4 – Petroleo Brasileiro SA – Petrobras, Companhia Siderurgica Nacional and Cemex SAB de CV priced deals for the Latin America region, a few emerging markets bond deals from various regions also trickled through during the past holiday-shortened week, and Slovakia’s SPP-Distribucia AS joined what remains a pretty healthy forward issuance calendar. But most volume this past week was taken up by under-benchmark sized deals from China, according to Prospect News’ data.

Financial markets in the United States and the United Kingdom were closed on Monday in observance of national holidays.

But Latin America, as expected, saw decent pricing activity immediately after those holidays.

Petrobras priced $1.5 billion of 5½% global notes due 2051 at 96.446 to yield 5¾%, according to an FWP filing with the Securities and Petrobras Global Finance BV Exchange Commission.

BofA Securities LLC, Goldman Sachs & Co. LLC, Itau BBA USA Securities, Inc., J.P. Morgan Securities LLC, MUFG, Santander Investment Securities Inc. and UBS Securities LLC were joint bookrunners of the deal, for which proceeds will be used to purchase notes under concurrent tender offers. Any remaining proceeds will be used for general corporate purposes.

Petrobras is a Buenos Aires-based energy company.

CSN Resources SA, the Luxembourg finance subsidiary of CSN, priced $850 million 4 5/8% notes due 2031 (expected ratings: Ba3//BB-) at par, according to a company release.

The proceeds of the Rule 144A and Regulation S notes are expected to be used to purchase notes that are tendered in a concurrent tender offer for the company’s outstanding 7 5/8% senior guaranteed notes due 2023 and for general corporate purposes, including liability management transactions.

CSN is a steel producer based in Rio de Janeiro.

Cemex announced it priced $1 billion perpetual subordinated hybrid notes at par, according to a 6-K filed with the Securities and Exchange Commission.

The notes are geared toward helping the company achieve investment-grade status. They will bear interest initially at 5¼%. The rate will reset every five years, starting on Sept. 8, 2026.

The step-up interest rate for reset periods beginning on the first reset date and ending on Sept. 8, 2046 (if Cemex is assigned an investment grade rating by S&P) will be Treasuries plus the initial margin of 428.4 basis points plus the first step-up margin of 25 bps. If Cemex is not assigned an investment-grade rating, the second step-up date will be Sept. 8, 2041 instead of Sept. 8, 2046.

The step-up interest rate for reset periods commencing on and after the second step-up date will be calculated based on the five-year U.S. Treasury plus the initial margin plus the first step-up margin plus 75 bps.

The notes have a make-whole call prior to June 8, 2026, and they are callable at par thereafter.

The proceeds of the Rule 144A and Regulation S transaction are for general corporate purposes, including repaying debt.

Cemex is a cement producer based in Monterrey, Mexico.

On the sovereign side of things, the Republic of Senegal priced €775 million amortizing senior notes due 2037 with a 15-year weighted average life, according to a pricing term sheet.

The notes priced at par to yield 5 3/8%, which was below talk for a yield of 5 7/8% to 6%. The spread over the mid-swaps rate is 500 bps.

The notes (expected ratings: Ba3/B+) will be redeemed in three installments on three specified amortization dates with a final maturity of June 8, 2037. The amortization amounts are €258,333,333.33 due on June 8, 2035, €258,333,333.33 due on June 8, 2036 and €258,333,333.34 due at final maturity.

Citigroup, Societe Generale and Standard Chartered Bank are bookrunners of the Rule 144A and Regulation S deal.

Concurrently with the pricing of the notes, Senegal made an any-and-all tender offer for its outstanding $500 million 6¼% notes due 2024.

Also back to corporates but from Asia, TML Holdings Pte Ltd., a wholly owned subsidiary of Tata Motors Ltd., priced $425 million of 4.35% senior notes due 2026 (expected rating: /B/), according to a company notice.

The Regulation S notes are non-callable for 2.5 years.

Order books for the new notes were in excess of $2.2 billion, or 5.1 times oversubscribed, from 138 accounts, according to the release.

TML is the holding company of JLR Automotive plc, Tata Daewoo, Korea and a few other international operations of Tata Motors.

The proceeds from the notes will be used by TML for refinancing a £225 million syndicated loan facility, for meeting issue expenses and for other general corporate purposes.

Tata Motors is an automaker based in Mumbai.

In significant local-currency offerings, Ayala Corp. priced PHP 10 billion of bonds due in 2024 and 2026, according to a 17-C filing with the Philippines Securities and Exchange Commission.

The base offer size was PHP 6 billion with an oversubscription option for up to an additional PHP 4 billion.

The company priced PHP 4 billion of 3.026% series A bonds due 2024 and PHP 6 billion of 3.7874% series B bonds due 2026

This was the first issuance under a new PHP 30 billion debt program, as previously announced.

Proceeds will be used to refinance some Philippine peso-denominated obligations and to partially fund capital expenditures.

Ayala is a Makati City, Philippines-based conglomerate.

Meanwhile the forward calendar continued to grow. Bratislava, Slovakia-based natural gas pipeline company SPP-Distribucia announced it plans to price €500 million of senior unsecured bonds due 2031 (expected ratings: Baa2).

Erste Group Bank AG is a manager of the deal, for which proceeds are expected to be used to repay the company’s outstanding €500 million bond due on June 23.

Market players were attempting to understand what impact if any Friday’s U.S. monthly payrolls report might have on upcoming activity. U.S. Treasury bond yields slipped after a mixed report in which the Labor Department showed the U.S. economy added slightly fewer jobs than economists had expected, but the unemployment rate fell more than expected. Together, the mixed data suggested the Federal Reserve will continue to be patient before paring back additional support from the economy.

China issuance

For China, there were a number of chunky, benchmark sized deals as well as a healthy dose of smaller deals.

China Merchants Bank Co. Ltd. subsidiary CMB International Capital Corp. Ltd. is guarantor of a new $600 million issue of 1 3/8% notes due 2024 from Legend Fortune Ltd.

The notes priced under the company’s $2 billion medium-term note program, according to a notice with the Stock Exchange of Hong Kong Ltd.

SFG International Holdings Co. Ltd. issued $500 million of 2.4% guaranteed bonds (A2/A+) due 2026. Those bonds are guaranteed by Shandong Finance Investment Group Co., Ltd.

Shandong Finance Investment plans to use the proceeds for project investment and to supplement its working capital.

Among medium-term note programs launched, Greenland Global Investment Ltd. announced the establishment of an $8 billion medium-term note program guaranteed by parent company Greenland Holding Group Co. Ltd.

BOC International and HSBC are the joint arrangers and dealers for the Regulation S program.

The program listing became effective on June 2 and will last 12 months.

The company is a real estate development and operation services company based in Shanghai.

And Industrial Bank Co., Ltd. announced the establishment of a $5 billion medium-term note program, according to a company announcement on Wednesday.

Industrial Bank Co., Ltd. Hong Kong Branch and Citigroup are the joint arrangers and dealers under the program.

The program is expected to become effective June 3.

The lender is based in Fuzhou, in the Fujian Province.

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