Emerging Markets: breadth improves; Korea prices notes; Africa, Latin America see deals

By Rebecca Melvin

New York, Sept. 11 – Emerging markets saw market breadth improve this past week as issuers is Latin America and Africa joined those that have been the mainstay in Asia in bringing notes, according to Prospect News’ data.

Sovereign issuance was decidedly light, while a green bond priced by an emerging markets corporate issuer garnered attention. Reuters called the Suzano Austria GmbH green bond the first of its kind and likely to be followed by more such issuers, tapping into strong demand among investors for paper earmarked for sustainable and environmentally focused use of proceeds.

Republic of Korea was a sovereign issuer in a field conspicuously absent of sovereign participants this past week. The Asian country priced $1,325,000,000 of notes in two tranches, or €700 million of 0% five-year notes and $625 million of 1% 10-year notes priced. The five-year notes priced at 100.296, and the 10-year paper priced at 98.139.

BNP Paribas, Merrill Lynch International, Citigroup Global Markets Ltd., J.P. Morgan Securities LLC, Standard Chartered Bank and Mirae Asset Daewoo Co. were joint bookrunners of the SEC-registered notes (Aa2/AA), which will be listed on the Singapore Stock Exchange.

Moving to the Global South, there were a pair of Africa-focused bonds in the market this past week, one in the energy sector and the other in mining. Anglo American Capital plc, a London-based entity of Johannesburg mining company Anglo American plc, priced $1.5 billion of senior notes (Baa2/BBB/BBB) in two parts on Tuesday, according to a market source.

A $1 billion tranche of Anglo American Capital 2.625% 10-year notes, talked to price with a spread in the 230 basis points over Treasuries area, came at a Treasuries plus 205 bps spread.

Anglo American sold $500 million of 3.95% 30-year notes at a 260 bps over Treasuries spread.

Initial price talk was in the Treasuries plus 290 bps area.

BNP Paribas Securities Corp., Goldman Sachs & Co. LLC, HSBC Bank plc and Santander Investment Securities Inc. were the bookrunners.

Looking ahead, London-based Vivo Energy plc, which distributes and markets Shell and Engen branded fuels to customers in Africa, is proposing to offer $350 million of senior notes (expected: Baa3/BB+/BB+) with a maturity of five or seven years.

The notes will be issued through subsidiary Vivo Energy Investment BV and guaranteed by Vivo Energy and Vivo Energy Holding BV.

Proceeds from the Rule 144A and Regulation S offering will be used to repay all amounts outstanding under the company’s amortizing term facility and incremental term facility and for general corporate purposes.

From the Latin America region, Mexico’s Infraestructura Energetica Nova SAB de CV, or IEnova, priced on Thursday $800 million of 4¾% notes due 2051 (Baa1/BBB/BBB), according to a Singapore Exchange announcement.

The Rule 144A and Regulation S notes are expected to be listed for trading on the Singapore Exchange.

Proceeds of the notes are earmarked for general corporate purposes, including repaying all or a portion of IEnova’s outstanding revolving credit facility, among other short-term debt.

IEnova is Mexican gas distributor majority-owned by California-based utility holding company Sempra Energy.

Arcos Dorados Holdings Inc., which means Golden Arches, priced an additional $150 million of its 5 7/8% senior notes due 2027. The announcement from the Uruguay-based McDonald’s franchisee put pricing of the deal at 102.25 plus interest accrued from April 4. That meant an additional $26.27 per bond, or $3,941,145.83 in total.

The 5 7/8% notes due 2027 deal size is now $415 million, including the original $265 million of notes that priced in 2017.

This past week brought a notable green bond from a Brazilian pulp and paper company, Suzano Austria. The company priced $750 million of 3.75% guaranteed global notes due Jan. 15, 2031 (BBB-/BBB-) on Thursday at a spread of Treasuries plus 327 bps.

The green notes priced at 98.32 after attracting more than $6 billion in bids for new paper. The sustainability-linked bond is tied to the paper company cutting its greenhouse gas emissions by 15% over 10 years. If the company fails to make that goal, it will have to pay an additional 25 bps on the coupon.

The sustainability mantle means that the company can tie proceeds to environmental goals of the company rather than specific finance for specific environmentally-focused projects.

Initial price talk was at the 4½% area, according to a market source.

The coupon will step up to 4% on July 16, 2026 if the company has not satisfied the sustainability performance target or if the satisfaction of that target has not been verified.

Additional bookrunners are Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, MUFG, Santander Investment Securities Inc. and SMBC Nikko Securities America, Inc.

Suzano Austria is a Vienna-based subsidiary of Suzano. The pulp and paper company is based in Sao Paulo, and the notes are guaranteed by Suzano SA.

Moving over to Asia, a gas transmission and distribution company joined the issuer ranks, which remained dominated by lenders and a property developers.

Lanfang, China-based investment holding company, ENN Energy Holdings Ltd., which invests in gas pipeline infrastructure, priced $750 million of 2 5/8% green bonds due 2030 (Baa2/BBB/BBB) at 99.164 on Thursday.

The proceeds will be used for refinancing existing debt and to fund refinance capital or operating expenditures, including research and development, construction, acquisition and operating on new or existing green projects.

The Singapore branch of Beijing-based lender ICBC Ltd. issued $800 million of 1% notes due 2023, according to a notice of listing on the Singapore Exchange. It also issued earlier in the week $1 billion of 1.2% notes due 2025, according to a notice of listing on the Singapore Exchange.

Both deals were managed by ICBC Singapore Branch, Industrial and Commercial Bank of China (Asia) Ltd., Industrial and Commercial Bank of China Ltd., Dubai (DIFC) Branch, among a long list of others. The company also issued $1 billion of 1.2% notes due 2025 on Wednesday, as previously reported.

United Overseas Bank Ltd. priced $600 million of 1¾% subordinated notes due 2031 (expected ratings: A2/BBB+/A) at 99.739, according to a company news release.

The notes are non-callable until March 16, 2026. They have a rate reset after that date equal to five-year U.S. Treasuries plus 152 bps.

Credit Suisse (Singapore) Ltd., Hongkong and Shanghai Banking Corp. Ltd., Singapore Branch, Societe Generale, Standard Chartered Bank (Singapore) Ltd. and United Overseas Bank Ltd. are joint lead managers for the Regulation S notes, which are being issued under the bank’s $15 billion global medium-term note program and being treated at tier 2 capital.

The retail bank is based in Singapore.

Bank of Communications Co., Ltd. Hong Kong Branch sold $350 million floating-rate notes due 2023 and $800 million 1.2% notes due 2025, according to a notice.

Bank of Communications Hong Kong Branch, Agricultural Bank of China Ltd., Credit Agricole and HSBC are joint global coordinators, as well as joint lead managers and joint bookrunners alongside ABC International, Bank of China, Bank of East Asia, Ltd., Bocom International, Cathay United Bank, China Everbright Bank Hong Kong Branch, China Securities International, Commerzbank, Commonwealth Bank of Australia, CTBC Bank, ICBC Singapore and Standard Chartered Bank.

Bank of Communications is based in Shanghai.

Hong Kong’s Nan Fung Treasury Ltd. priced $500 million of 5% guaranteed senior perpetual capital securities, according to a notice.

The notes (Baa3) are guaranteed by Nan Fung International Holdings Ltd.

Hongkong and Shanghai Banking Corp. Ltd., Goldman Sachs (Asia) LLC, J.P. Morgan Securities plc and UBS AG Hong Kong Branch are the bookrunners and lead managers.

Nan Fung International will use the proceeds for refinancing outstanding perpetual securities, according to Moody’s Investors Service.

Nan Fung is an investment holding company. Its main business is property development.

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