Emerging Markets: Temasek prices $2.5 billion notes; Aydem Renewables debuts with green issue

By Rebecca Melvin

Concord, N.H., July 30 – Emerging markets primary issuance was light this past week and emerging markets bond funds marked another outflow in the waning days of July.

While issuance was light, the week was not devoid of some notable new deals. On Monday, Temasek Financial (I) Ltd. priced $2.5 billion of notes in three tranches due 2031, 2041 and 2061 (expected ratings: Aaa/AAA). And on Wednesday Turkey’s Aydem Yenilenebilir Enerji AS (Aydem Renewables) issued a green bond in the international bond market, according to market source.

Global bond funds have now recorded three straight outflows, the longest such run since early in the second quarter of 2020, and global emerging markets bonds funds experienced net redemptions for two of the past three weeks, according to data tracker EPFR’s Global Navigator, a weekly fund flows update, published on Friday.

“Investors are opting instead to concentrate their exposure, using U.S., Europe and China bond funds. Between them, these three groups account for over 85% of the total inflows for all EPFR-tracked bond funds so far this year,” according to the Global Navigator’s author Cam Brandt.

“During the latest week, China bond funds recorded their 76th inflow in the 80 weeks since the beginning of last year. That was not enough, however, to offset redemptions from other emerging markets bond fund groups. Meanwhile, China’s average allocation among [global emerging markets] bond funds has now dropped for four straight months after hitting a new record high in February,” Brandt wrote.

And at the asset class level, emerging markets high-yield bond funds recorded their biggest outflow in more than 15 months during a week when flows for developed markets high-yield funds hit a three-week high.

Benchmark-sized deals

Temasek, the investment company based in Singapore priced two shorter dated tranches of $750 million in size and a larger $1 billion of notes for its longer, 40-year tranche on Monday. Also on Monday, India’s Adani Ports and Special Economic Zone Ltd. priced $850 million of notes (Baa3/BBB-/BBB-) in two tranches.

The port operator and logistics company based in Ahmedabad priced $300 million of 3.828% notes due Feb. 2, 2032 at a spread of 255 basis points over Treasuries. Initial price talk was in the Treasuries plus 280 bps area.

The company also priced $450 million of 5% notes due Aug. 31, 2041 at a spread of 325 bps over Treasuries. Initial price talk was in the 5¼% area.

On Tuesday, Brazil’s Oi SA wholly owned subsidiary Oi Movel SA priced $880 million of 8¾% senior secured notes due 2026 (B-/CCC+), according to a 6-K filing with the Securities an Exchange Commission.

The notes will be guaranteed by the parent company.

Proceeds from the Regulation S offering will be used to repay Oi Movel’s R$2.5 billion of senior secured debentures due January 2022. Any remaining proceeds are earmarked for general corporate purposes.

The offering is expected to close on Friday.

The telecommunications company is based in Rio de Janeiro.

Aydem debuts with green bond

Aydem Renewables sold its inaugural bond issue in the international market and made it a green bond, according to market sources.

The company sold $750 million of 7¾% green bonds with a 5.5-year tenor (B/B+), according to a press release from the company.

The order books for the issue reached $1.6 billion from 131 accounts.

The company states that the issue is the largest green bond issuance from Turkey.

Proceeds will be used to repay bank debt and fund new investments.

Aydem is a Turkish renewable energy producer. Headquarters are in Denizli.

And on Thursday, Banco Nacional de Comercio Exterior SNC (Bancomext) priced $500 million tier 2 subordinated capital notes (Baa3) due 2031 to yield 2.72%, or a spread of 200 bps over U.S. Treasuries, according to a market source.

The notes were talked initially to yield in the low 200 bps area over Treasuries.

The securities are non-callable for five years.

JPMorgan and Morgan Stanley are joint bookrunners of the Rule 144A and Regulation S notes, for which proceeds will be used to finance or refinance green and social projects, or a combination of them.

The state-owned export import lending agency is based in Mexico City.

Looking ahead, India’s Summit Digitel Infrastructure Pvt. Ltd. is in the global market with a debt offering for up to $500 million (BBB-), according to an exchange filing.

The board of directors of the company has approved the issuance of senior secured notes with a 10-year tenor, in one or more tranches.

Proceeds will be used for capital expenditures, repaying existing debt or general corporate purposes.

The notes will be listed on the Singapore Exchange Securities Trading Ltd.

Summit Digitel is a Mumbai-based provider of mobile telephone, broadband and digital services.

The company was formerly known as Reliance Jio Infratel Pvt. Ltd. It was established in 2020 through Brookfield’s acquisition of the 'Passive Telecom Infrastructure Entity' from Reliance Industries Ltd.

Temasek $2.5 billion of notes

Temasek Holdings (Pvt) Ltd. is guarantor of the mega deal of notes, which were priced under the issuer’s $25 billion guaranteed medium-term note program.

The $750 million tranche of 1 5/8% 10-year notes priced at 99.423 for a yield of 1.688%, or spread over U.S. Treasuries of 40 bps. The notes had been talked initially at a spread in the Treasuries plus 60 bps area.

The $750 million tranche of 2 3/8% 20-year notes priced at 97.949 for a yield of 2.506%, or a spread over Treasuries of 65 bps. The notes had been talked initially at a spread in the Treasuries plus 80 bps area.

The $1 billion tranche of 2¾% 40-year notes priced at 98.825 for a yield of 2.799%, or a spread over Treasuries of 85 bps. The notes had been talked initially at a spread in the Treasuries plus 100 bps area.

The joint lead managers and bookrunners of the Rule 144A and Regulation S notes were Citigroup, Credit Agricole, HSBC, Morgan Stanley and Standard Chartered Bank.

The proceeds will be used to fund Temasek’s ordinary course of business. They are expected to be listed on the official list of the Singapore Exchange Securities Trading Ltd. on Aug. 3.

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