Emerging Markets: Qatar Petroleum prices jumbo $12.5 billion; Turkey, Latvia, Cameroon price

By Rebecca Melvin

Concord, N.H., July 2 – Qatar Petroleum was a centerpiece of the emerging markets bond market this past week after it priced a jumbo $12.5 billion of senior bonds in four tranches, and the emerging markets sovereign primary heated up significantly, marking a change from recent weeks, according to Prospect News’ data.

Qatar Petroleum, which is one of the world’s largest liquified natural gas producers and also 100% owned by Qatar, saw high demand for its five-, 10- and 20- year conventional bonds and a 30-year dual-listed Formosa bond (Aa3/AA-/AA-) that priced, according to a market source.

In the sovereign space, issuers of new deals early in the week included Philippines, Brazil and Panama. At midweek, a batch of sovereign deals included Turkey, Latvia and Cameroon.

Cameroon priced €685 million 5.95% amortizing notes due 2032 at par for a yield spread of 584.8 basis points over mid-swaps, according to a pricing term sheet.

The yield was set below guidance that was in the 6 1/8% area and initial talk of 6 3/8% to 6½%.

Final books were €1.7 billion in size when the notes (expected ratings: /B-/B) priced on Wednesday.

Turkey priced €1.5 billion of 4 3/8% six-year notes at 99.355 to yield 4½% on Wednesday, according to an FWP filing with the Securities and Exchange Commission.

Initial price talk for the notes was in the area of 4¾%, before the notes were guided to the 4½% to 4 5/8% area, a market source noted.

The notes priced with a spread of Treasuries plus 497.9 bps, or mid-swaps plus 468.3 bps.

Initial price talk for the notes was in the area of 4¾%.

Latvia priced €500 million of 0% notes due Jan. 24, 2029 at 99.977 to yield 0.003%, or a spread over mid-swaps of 6 bps, according to a market source.

But on a down beat, Fitch Ratings said it downgraded Colombia’s long-term foreign-currency and local currency issuer default ratings to BB+ from BBB-.

“The downgrade reflects the deterioration of the public finances with large fiscal deficits in 2020-2022, a rising government debt level, and reduced confidence around the capacity of the government to credibly place debt on a downward path in the coming years. Colombia’s gross general government debt (GGGD) to GDP is forecast to reach 60.8% in 2021, more than double the 30% level when Fitch upgraded Colombia back to the BBB category in 2011,”

Fitch said it forecasts debt to continue to rise through 2022 and does not expect substantial debt reduction over the medium term, leaving Colombia vulnerable to shocks. The outlook was revised to stable from negative.

Among corporates, Colombia’s Ecopetrol SA reported that it has received authorization from Colombia’s Ministry of Finance and Public Credit to structure and place $1.4 billion of bonds in the international capital markets, according to a company news release on Wednesday.

The proceeds of the issuance will be used to finance organic growth opportunities and the ordinary course of its business.

The Bogota, Colombia-based petroleum company intends to apply to list the notes on the New York Stock Exchange.

Suzano Austria GmbH, a subsidiary of Brazil’s pulp and paper company, disclosed details of its $1 billion of 3.125% global notes due Jan. 15, 2032 (BBB-/BBB-) guaranteed by Suzano SA in an FWP filing with the SEC.

Suzano Austria priced the notes on Monday at 98.627 to yield 3.28%.

The notes priced at a spread of 180 bps over Treasuries compared to talk in the Treasuries plus low 200 bps area, according to a market source.

The notes will bear interest at the 3.125% fixed rate initially. That rate will increase by 12.5 bps on July 16, 2026, unless the company meets its women in leadership positions sustainability performance target; and will step up by a further 12.5 bps on July 16, 2027, unless the company meets its industrial water withdrawal intensity sustainability performance target.

Proceeds will be used to repay existing debt, including maturing obligations under some export pre-payment agreements and the 5¼% senior notes due May 2024 issued by Fibria Overseas Finance Ltd., and otherwise for general corporate purposes.

Korea Housing Finance Corp. priced €1 billion of 0.01% five-year social covered bonds (AAA), according to a notice on Tuesday and a market source.

The notes priced at 100.426 to yield negative 0.075%, or a spread of mid-swaps plus 18 bps.

Initial guidance was in the mid-swaps plus 21 bps area before being guided to the mid-swaps plus 19 bps area, plus or minus 1 bp.

The notes come with no optional redemption provisions.

Proceeds will be used to facilitate access to housing finance for low- and middle-income earners in Korea through a diverse range of mortgage loan products.

The housing finance company is based in Seoul, South Korea.

Qatar Petroleum deal

Qatar Petroleum’s three conventional tranches included a $1.5 billion tranche of 1 3/8% bonds due Sept. 12, 2026, which priced at 99.905 for a 1.394% yield and spread over Treasuries of 50 bps. The five-year tranche has a make-whole call at a Treasuries plus 10 bps premium and then are callable at par one month prior to maturity.

The popular offerings also included a $3.5 billion tranche of 2¼% 10-year bonds, which priced at 98.937 for a 2.37% yield, or 90 bps spread over Treasuries. The 10-year bond has a make-whole call at Treasuries plus 15 bps and then a par call three months prior to maturity.

And there was also a $3.5 billion tranche of 3 1/8% 20-year bonds priced at 99.631 to yield 3.15%, or a spread of 112.6 bps over Treasuries. The 20-year bond has a make-whole call at Treasuries plus 20 bps and then a par call six months prior to maturity.

The $4 billion tranche of 3.3% 30-year Formosa bonds priced at par for a spread of 119.4 bps over Treasuries. Like the 20-year tranche, the Formosa bond has a make-whole call at Treasuries plus 20 bps followed by a par call six months prior to maturity.

Philippines, Brazil and Panama

Philippines sold $3 billion of notes in two tranches on Monday (Baa2/BBB+/BBB), which were both reoffered below par, according to additional details of the notes included in FWPs filed with the SEC.

The $750 million of 1.95% notes due Jan. 6, 2032 priced at 98.779 for a yield of 2.08%, or a spread of Treasuries plus 60 bps. Price talk for the notes was in the Treasuries plus 90 bps area.

The $2.25 billion 25-year tranche priced with a 3.2% coupon at 99.149 to yield 3¼%, or a spread of Treasuries plus 114 bps. Initial price talk was for a coupon in the 3.55% area.

Brazil priced $2.25 billion of bonds in two tranches including a new series of 3¾% global bonds due 2031 and a reopening of the sovereign’s 4¾% global bonds due 2050 (Ba2/BB-/BB-).

And on Tuesday, Panama priced $1.25 billion of 3.362% local Treasury bonds due 2031, Bonos del Tesoro, that will be denominated in U.S. dollars, according to a press release.

Proceeds will be used for general budgetary purposes and to fund the one-day tender offer for the republic’s 4% global bonds due 2024, conducted on June 23.

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