Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly, on December 21 - 27, 2015.    

 

PETROLIAM NASIONAL BHD (Petronas) issued some US$5 billion worth of trust certificates and global medium-term notes (GMTN) in March 2015, making it Asia’s second largest corporate dollar bond issuance since Alibaba Group’s US$8 billion issuance in November 2014.

According to Maybank Investment Bank, which was the joint bookrunner, the issuance was a breakthrough by a Malaysian corporate issuer, tapping long-tenured US dollar funding of 30 years. The issuance was well supported despite the challenging conditions in the oil and gas industry.

Despite being launched when the global oil market was weak, the trust certificates and GMTN were well supported by global investors with the orders totalling more than US$12 billion, says Maybank in its submission for the Best Fundraising (non-IPO) category of the awards.

When the programme was launched in March 2015, Brent crude oil was trading at an average of US$56.94 per barrel. The benchmark price has since lost 39% of its value, closing at US$37.44 last Wednesday.

Petronas issued US$1.25 billion in trust certificates and US$3.75 billion of GMTN under the Global MTN Programme, which will see the national oil and gas corporation issuing up to US$15 billion of GMTN.

The trust certificates mature in 2020 while the GMTN have 7, 10 and 30-year tenures. At the point of issuance, Standard & Poor’s and Moody’s Investors Service rated the debt paper at A- and A1 respectively.

The five-year notes were priced at 110 basis points (bps) over the five-year US treasury (UST), the seven-year at 130bps over the seven-year UST, the 10-year at 150bps over the 10-year UST and 30-year at 190bps over the 30-year UST.

Moody’s has forecast Brent crude to average US$43 per barrel and US$48 per barrel in 2016 and 2017 respectively, down US$10 and US$12 per barrel from its previous assumptions.

The rating agency expects Petronas’ earnings before interest, taxes, depreciation and amortisation to decline between 38% and 40% in 2015 and a further 4% to 6% in 2016 under its price assumptions. Petronas reduced its dividends to the government to RM16 billion in 2015 from RM26 billion in 2014.

CIMB Investment Bank, Citigroup, JPMorgan and Morgan Stanley were the active joint bookrunners while Deutsche Bank, HSBC, Maybank IB and MUFG were the passive joint bookrunners for the programme.

Dubai Islamic Bank PJSC, Hong Leong Islamic Bank Bhd and National Bank of Abu Dhabi PJSC were the co-managers of the debt issuance.

 

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