Saudi Arabia appoints banks for its first dollar-bond sale

According to sources, the Government of Saudi Arabia appointed JPMorgan Chase & Co., HSBC Holdings Plc and Citigroup Inc. to arrange its first international bond sale of atleast $10bn.

The banks would act as the global coordinators on the issue and additional banks would be added later as joint lead arrangers and book-runners on the deal.

Previously in April 2016, the kingdom had issued a $10bn loan, its first in 15 years from a group of U.S., European, Japanese and Chinese banks.

Source: Bloomberg

Brazilian miner Vale S.A. issues U.S.-dollar bonds

Brazilian miner Vale S.A. tapped the U.S. dollar debt market for the first time in almost four years as a commodity-price recovery brings down the Brazilian mining giant’s borrowing costs.

The company’s subsidiary Vale Overseas Limited, issued and priced its senior unsecured $1.25bn bond due 2021. The notes are guaranteed by Vale S.A.

Joint Books are BB Securities, Bank of America, Bradesco BBI, HSBC and Santander.

The company, which last sold U.S. dollar bonds in 2012, would use proceeds from the issuance to develop its iron-ore project, which it plans to commission later in 2016.

Separately, the company plans on divesting assets worth $10bn by 2017 after reporting a fourth-quarter net loss of $8.6bn.

Source: Bloomberg


China to issue its first offshore sovereign bond in London

China’s Ministry of Finance plans to launch its first offshore sovereign bond in London. The CNY 3bn ($548m) three-year bond is being marketed at a price similar to bonds being sold in Hong Kong, which serves as the common venue for launching of Chinese debt aimed at the offshore market.

UK’s finance minister George Osbourne stated that China’s decision of choosing London for its bond issuance reinforced the UK’s strong economic and financial relationship with China.

Previously in 2015, The People’s Bank of China sold CNY 5b of short-term central bank notes in London for the first time.

Source: Yahoo Finance

Axis Bank to issue a $500m green bond

India-based private lender Axis Bank plans to raise at least $500m through green bonds from the international market, the first such issue for the private lender.

India’s third largest private bank would be the fifth issuer of green bonds in India since Yes Bank issued the first such bond in February 2015 to raise INR 1,000 crore. Other lenders that have raised green bonds include IDBI Bank and Exim Bank.

According to bankers involved in the issuance, initial pricing guidance for the Axis Bank’s issue is 175 basis points over the US Treasury note. The bonds would be priced late evening on Monday after assessing demand from US investors.

Green bonds are like any other debt instrument but the funds raised from such a bond sale are used exclusively for renewable energy projects. With the Indian government and private sector increasingly focusing on renewable energy projects, the demand for such funds is expected to rise over time.

India has a target of installing 100GW of solar power capacity and 60GW of wind power capacity by 2022. The total installed capacity of renewable energy stands at 30GW, of which wind energy projects account for 24GW, solar contributes 5GW and the rest comes from smaller sources, such as biomass.

An Indian private bank may pay at least 190 bps above US Treasury notes to raise capital through medium-term notes (MTN). But the bank can raise funds through green bonds at 15-20 bps lower.

Separately, another state-owned Indian lender, IDBI Bank, was also looking to issue a second set of green bonds. The funds raised will be part of $2 billion MTN programme.

Fitch Ratings has assigned a rating of BBB- with a stable outlook to the proposed $500m bond issue by Axis Bank.

The tenor is likely to be around five years, and the notes are to be issued by Axis Bank’s Dubai International Financial Centre branch.

Source: Livemint

Nigeria plans first Sukuk bond issuance in 2016

Nigeria’s government may plan to issue its first sovereign Islamic bonds (sukuk) in the second half of 2016. The issuance, if finalized, follows similar sovereign issuances from Senegal and Ivory Coast.

The nation set up a multi-agency committee to work out the modalities for the issuance, which includes the Debt Management Office (DMO), Securities and Exchange Commission (SEC), Central Bank of Nigeria (CBN) and Infrastructure Concession and Regulatory Agency (ICRA), among others.

Currently, Nigeria had only one sub-national Sukuk bond which was issued by the Osun state government. Two other states, Kebbi and Sokoto states have indicated interests in issuing Sukuk bonds.

The absence of a sovereign Sukuk bond to serve as benchmark for other government and corporate Sukuk issuance has been cited as a drawback for the growth of non-interest Sukuk bond market.

Standard and Poor’s rating services (S&P) estimated that global Sukuk issuance could reach up to $55bn in 2016.

Source: AfricaNews

Saudi Arabia in talks with banks over bond sale

The Kingdom of Saudi Arabia plans on issuing debt in the international markets later in 2016 to stem the sharp decline in foreign exchange reserves, following a depressed crude oil market.

A number of banks have been asked to indicate their terms on raising the sovereign debt issuance.

The size and maturity of Saudi Arabia’s first international bond has not been disclosed publicly, but according to credit analysts at two European banks, the kingdom may borrow at rates about 200 basis points above equivalent US Treasury bonds.

Previously, in April 2016, the kingdom raised a $10bn, 5-year loan from banks including JPMorgan, HSBC and Bank of Tokyo-Mitsubishi in a deal that was several times subscribed and allowed the government to increase the sum borrowed.

The loan is seen as a first step towards sovereign bond issuance and Saudi officials have said that the kingdom could increase debt levels from less than 7% of gross domestic product in 2015 to 50% of GDP by 2020.

Saudi Arabia’s debt plans come as falling oil prices encourage other Gulf countries, including Abu Dhabi and Oman, to turn to capital markets for funding.

Separetely, Saudi Arabia’s credit rating has been downgraded by all three big global rating agencies this year.

Source: FT

AerCap plans $1bn bond issuance

Aircraft leasing giant AerCap planned on issuing $1bn of bonds paying a coupon of 3.95% due February 2022.

The company, which operates 1,670 managed or on-order aircrafts in its portfolio and almost $44bn (€39bn) of assets, planned to use proceeds from the bond sale to buy or refinance aircraft assets and repay some of its existing high-cost debt.

Last week, New York-listed the aircraft lessor reported its 1Q’16 adjusted net profit of $301m, which was virtually unchanged from the same period in 2015.

The company spent more than $300m in buying back its own shares in the market between January and 9 May 2016. It had $29.8bn of debt on its balance sheet at the end of March 2016.

Separately, Standard & Poor assigned a “BBB-” rating on the new unsecured bonds AerCap was issuing, with a stable outlook.

Moody’s rates the issuance at Ba1 and Fitch rated the debt at BB+.

Joint bookrunners for the deal were Barclay’s Capital, Mizuho Securities, RBC Capital and Wells Fargo.

Lead managers for the issuance were HSBC, BNP Paribas, Bank of America, Citigroup, Credit Agricole CIB, Deutsche Bank, Fifth Third, Goldman Sachs, JP Morgan, Morgan Stanley and SunTrust Robinson Humphrey.

Co-managers were ING and Scotiabank.

Source: Irish Times, Aircraft Investor

Moody’s assigns a Baa3 rating to Dell’s proposed secured notes

Moody’s assigned a provisional rating of Baa3 to Dell Inc.’s proposed senior secured notes.

The debt is being issued by Diamond 1 Finance Corporation (“Finco 1”) and co-issuer Diamond 2 Finance Corporation (“Finco 2”), which are entities that will merge into Dell International LLC (a debt issuing subsidiary of Dell Inc.) and EMC Corporation (“EMC”), respectively, upon closing of the Dell EMC merger.

Post closing of the transaction, Dell International and EMC will assume all of Finco 1’s and Finco 2’s obligations under these notes.

The Dell – EMC merger is expected to close by the end of October 2016.

Source: Moody’s

Sweden’s Corral to raise PIK notes due 2021

Swedish oil refiner Corral Petroleum Holdings priced its € 570m, 11.750% / 13.250% Senior PIK Toggle Notes and an SEK 500m, 12.250% / 13.750% Senior PIK Toggle Notes, both due 15 May 15 2021.

The Euro notes were priced at 98.578% of their principal amount and the SEK notes were priced at 99.043% of their principal amount.

Interest on each of the notes is semi-annual in nature, on 1 July and 1 January of each year, commencing on 1 January 2017.

The proceeds from the offering will be used to repay its existing $613m, 15% euro-denominated and dollar-denominated senior notes due 31 December 2017, with the remainder to be retained by Corral for the purpose of making cash interest payments on the Notes.

Source: Company Press Release