Emerging Markets: Ukraine sells large tranche; Guatemala’s CMI prices chunky deal; Asia prints

By Rebecca Melvin

Concord, N.H., April 30 – Emerging markets bond issuance in the week heading into May was down somewhat from the previous week, but investors continued to dedicate funds to the asset class, with emerging markets bond funds recording their sixth inflow, albeit a modest one, in the last seven weeks. The funds with hard-currency mandates were attracting investment at a rate six times more than local currency funds, according to Prospect News data and a note from EPFR.

China bond funds extended an inflow steak that stretches back exactly a year, the data tracker said. Overall, another solid week of flows meant that most the regional and asset class specific bond funds caused a lift in the year-to-date total for all EPFR-tracked bond funds to within striking distance of the $300 billion market.

In terms of regional issuance, the Central & Eastern Europe region hosted the week’s largest issuer.

Ukraine priced $1.25 billion in a single tranche of new 10-year notes, which priced at par to yield 6 7/8%, or a spread over U.S. Treasuries of 561.8 basis points.

The Ukraine note’s spread over mid-swaps was 549.1 bps. Pricing, which occurred early Tuesday, was tight to talk for yield in the low 7% area.

BNP Paribas, Deutsche Bank, Goldman Sachs International and JPMorgan were joint bookrunners of the Rule 144A and Regulation S deal, for which final order books were in excess of $3.3 billion.

Latin America saw Guatemala’s Corporacion Multi Inversiones (CMI) issue a chunky $700 million deal of 6¼% eight-year green bonds, a double B-rated security like Ukraine, but this one was BB-.

Investors made offers for the CMI notes that were nearly five times the size of the issuance, the company said.

The geographic breakdown of offers included 56% from the United States, 29.4% from Europe, 12.3% from Latin America and 2.3% from Asia.

The proceeds may be used for renewable energy, energy efficiency, green buildings and clean transportation.

The company is a multinational agro-industrial corporation.

Moving on to Asia, Korea was the host country to a pair of new issues that were each $500 million in size. Korea’s Kookmin Bank sold $500 million of 1 3/8% sustainability bonds due May 6, 2026 and Korea Hydro & Nuclear Power Co. priced $500 million of 1¼% notes due April 27, 2026.

Kookmin Bank’s notes sold at a spread of Treasuries plus 30 bps, low to initial price talk in the 85 bps area over Treasuries.

BofA Securities, Credit Agricole CIB, HSBC, Kookmin Bank, Societe Generale and Standard Chartered were bookrunners for the offering.

Proceeds, according to Moody’s Investors Service, will finance loans falling under green or social eligible categories.

The lender is based in Seoul, South Korea.

Citigroup Global Markets Inc., Credit Agricole CIB, HSBC, J.P. Morgan Securities plc, Merrill Lynch International and UBS AG Hong Kong Branch were the bookrunners for the Korea Hydro & Nuclear Power deal.

From China, Talent Yield International Ltd. sold $700 million of notes in two parts. The notes, which are guaranteed by parent Beijing Enterprises Holdings Ltd., included $300 million of 2% guaranteed bonds due 2026 and $400 million of 3 1/8% guaranteed bonds due 2031.

The 2% bonds sold at 99.495, and the 3 1/8% bonds had a discount of 98.696.

Proceeds will be used to refinance existing offshore debt.

The notes have a make-whole redemption option at any time based on a Treasuries plus 20 bps premium.

Bank of China (Hong Kong) Ltd., DBS Bank Ltd., HSBC Ltd., Mizuho Securities Asia Ltd., Standard Chartered Bank, CCB International Capital Ltd., China Citic Bank International Ltd., China Everbright Bank Co., Ltd., Hong Kong Branch, China International Capital Corp. Hong Kong Securities Ltd., Credit Agricole CIB and Industrial and Commercial Bank of China (Asia) Ltd. are bookrunners for the Regulation S issue.

Bank of China, DBS Bank, HSBC, Mizuho and Standard Chartered Bank are also joint global coordinators.

And Shenzhen, China-based property development company Kaisa Group Holdings Ltd. sold $500 million 11.7% senior notes due 2025 (B2//B) at par, according to a notice on Wednesday.

Credit Suisse, Deutsche Bank, China Citic Bank International, Guotai Junan International, Haitong International, HSBC and UBS are the joint bookrunners and joint lead managers of the new notes.

The proceeds of the new issue will fund a tender offer and/or exchange of existing notes.

The new notes are callable for par plus a make-whole premium and interest until Nov. 11, 2023. Subsequently they are callable at 104 plus interest until 2024, and then they may be redeemable at 102 plus interest until maturity.

In addition, there is an equity clawback in which the company may redeem up to 35% of the principal amount of notes prior to Nov. 11, 2023 with cash proceeds of one or more common stock sales at 111.7 plus accrued and unpaid interest.

The North Africa Middle East region was notably quiet this past week. But it does have a pair of deals on tap, however. Abu Dhabi Ports Co. PJSC guided pricing for a U.S. dollar-denominated offering of 10-year senior notes (expected ratings: (/A+/A+) to yield in the mid-swaps plus 120 bps area, according to market sources.

Pricing was tightened from initial talk in the area of mid-swaps plus 145 bps.

Order books for the notes, which are being sold under the company’s euro medium-term note program, were in excess of $3.5 billion at the time guidance was released.

Citigroup, First Abu Dhabi Bank and Standard Chartered Bank are joint global coordinators and joint bookrunners of the Regulation S registered notes. They are joined by Mizuho and Societe Generale acting as active joint lead managers and joint bookrunners and BNP Paribas, Credit Agricole CIB and SMBC Nikko, acting as passive joint lead managers.

The proceeds of the notes, together with a recently raised revolving credit facility, will be used to refinance the company’s two fully drawn AED 4.05 billion revolvers at their maturities in 2021.

Settlement is expected to occur on May 6, and the notes are expected to be dual listed on the London Stock Exchange and Abu Dhabi Securities Exchange.

The company is owned by Abu Dhabi’s government through a holding company.

Oman’s OQ SAOC is planning a dollar-denominated benchmark offering of fixed-rate notes due May 6, 2028, according to a market source.

Citigroup, HSBC and JPMorgan have been mandated as joint global coordinators, lead managers and bookrunners for the Rule 144A and Regulation S deal, with First Abu Dhabi Bank, MUFG, Natixis, SMBC and Societe Generale acting as lead managers and bookrunners as well.

The state-owned oil company is based in Muscat, Oman.

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