Kazakhstan's TCO oil consortium to sell $1.1 billion asset-backed bonds

By Paul A. Harris

St. Louis, Nov. 2 - Tengizchevroil Joint Venture (TCO) will hold a U.S. roadshow Monday through the week of Nov. 8 for a $1.1 billion offering of oil-export-backed 10-year eurobonds, according to a market source.

The bonds are expected to have a 6.75-year average life.

ABN Amro and Lehman Brothers have the bookrunning mandate.

The bonds will be backed by revenue generated from the export of oil from Kazakhstan's Tengiz oil and gas field, situated near Kazakhstan's Caspian Sea coast.

Moody's Investor Services has assigned its Baa3 rating to the bonds. Fitch Ratings, meanwhile, has rated the notes BBB-.

Partners of the joint venture include ChevronTexaco (50%), ExxonMobil (25%), Lukarko (5%) and KazMunaiGas (20%).

Proceeds from the bond sale will be used for the expansion of production capacities on the Tengiz oil and gas field.

An emerging markets syndicate official told Prospect News that although emerging markets asset-backed bonds are often sold primarily to the "private placement market," the size of the TCO deal will likely make it necessary for marketing to take place on a considerably wider scale.

Also, the source added, accounts that might not ordinarily take part in a debt offering from an emerging market such as Kazakhstan will take a closer look at this deal because of the extensive oil and gas assets backing the notes, and because of the corporations that comprise the joint venture.

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