Emerging Markets: Hungary prices $3 billion triple-tranche deal; OTP eyes sustainable bonds

By Rebecca Melvin

Concord, N.H., June 10 – The emerging markets primary market saw a few notable new issues price this past week, including a triple-tranche deal from Hungary, marking Central & Eastern Europe’s largest new issue for the year so far.

In addition, Hungary’s OJSC OTP Bank unveiled its newly established sustainable finance framework. It also selected banks and set fixed-income investor meetings next week for a potential upcoming bond sale.

For the Middle East and North Africa region, Jordan was heard to have received more than $1.2 billion in orders for an offering of dollar-denominated, five years bonds, according to a report from Reuters.

Jordan revised price guidance to the 8% area after initial price talk in low 8% range. The benchmark sized deal was expected to have priced late Wednesday, but Prospect News could not confirm the deal on Friday.

Meanwhile, Transnet SOC Ltd., the Johannesburg-based rail, port and pipeline company, was planning to fund a $1 billion international bond redemption ahead of maturity on July 26 using proceeds of a new $1 billion international bond deal, according to Moody’s Investors Service.

Moody’s was “increasingly concerned” about whether the company can pull it off but was reasonably certain the South African government will step in if needed, according to the release.

In another liability management transaction, Panama-based AES El Salvador Trust II (Trustco II) extended the expiration time for its cash tender offer for any and all of its $310 million 6¾% notes due 2023 to permit the issuer to meet the financing condition. J.P. Morgan Securities LLC is the dealer manager and solicitation agent for this deal.

In the Americas, JBS USA Lux SA, JBS USA Finance Inc. and JBS USA Food Co. priced an upsized $2.5 billion issue of senior notes in three parts on Monday.

The notes are guaranteed by JBS SA, the food and beverage company based in Brazil, and JBS USA Holding Lux Sarl along with other entities of the companies.

And Oversea-Chinese Banking Corp. Ltd. priced $750 million of tier 2 subordinated notes due 2032 at par to bear interest at 4.602% annually from issuance to the first call date, June 15, 2027.

If the notes are not redeemed on that date, then the interest rate will reset to the five-year Treasury rate plus 157.5 basis points.

The notes are being sold under the bank’s $30 billion global medium-term note program and will be issued June 15.

The issuer is a financial group based in Singapore.

Fund flows mount

The emerging markets primary action came amid fund outflows for the week ending June 8, according to EPFR’s Global Navigator note. The data tracker reported investors pulled more than $1.5 billion out of Europe, the United States and emerging markets bond funds.

Emerging markets bond funds have now surrendered more than $50 billion so far this year, with China bond funds accounting for a significant part of that amount, EPFR reported Friday. But diversified global bond funds recorded their biggest inflow since early April, ending an eight-week run of outflows.

Hungary takes a big bite

Marking the CEE’s largest deal so far this year, Hungary priced $3 billion of bonds this past week.

It priced $1.75 billion of seven-year notes at 98.792, $1.25 billion of 12-year notes at 97.188 and €750 million of nine-year notes at 98.161.

The yield for the dollar-denominated seven-year notes was talked in the Treasuries plus 225 basis points area, and the yield for the dollar-denominated 12-year notes was talked in the 295 bps area over Treasuries, according to a market source on Wednesday.

Pricing for the euro-denominated nine-year notes was talked at the mid-swaps plus 265 bps area.

JPMorgan SE, BNP Paribas, Goldman Sachs Bank Europe SE and ING are managers for the Rule 144A and Regulation S offering.

OTP Bank eyes green notes

The lender mandated BNP Paribas, Erste Group, ING (sole sustainability structuring adviser) and OTP Bank to organize the meetings beginning on Monday and concluding on Friday.

JBS prices triple-tranche deal

JBS’ deals consisted of:

• $500 million of 5 1/8% senior notes due Feb. 1, 2028, which priced with a 225 basis points spread of Treasuries. Spread talk was in the 250 bps area;

• $1.25 billion of 5¾% senior notes due April 1, 2033 at 287.5 bps over Treasuries versus talk in the 312.5 bps area; and

• $750 million of 6½% senior notes due Dec. 1, 2052 at 337.5 bps over Treasuries versus talk in the 362.5 bps area.

The Rule 144A and Regulation S offering was upsized from $1.5 billion.

Proceeds will be used to fund the tender offer consideration for any and all of the 6¾% senior notes due 2028 and up to an upsized amount of $600 million of 6½% senior notes due 2029. Remaining proceeds will be used for general corporate purposes, including the repayment of certain debt.

JBS USA is a Greeley, Colo.-based food and beverage company. Parent JBS SA is based in Brazil.

Jeff Pines and Lisa Mayntz contributed to this story.

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