Malaysia's state oil company Petroliam Nasional (Petronas), rated A2/A–/A–, has printed South-East Asia's biggest international bond on record, raising US$6bn in a three-tranche benchmark that also extends its curve to 40 years.
A US$2.25bn 3.5% 10-year portion priced at 98.736 to yield 3.652% or Treasuries plus 290bp, inside initial guidance of plus 340bp area.
A US$2.75bn 4.55% 30-year tranche priced at par, inside initial guidance of 5.00% area, and a US$1bn 4.8% 40-year bond came inside initial guidance of 5.25% area, also at par.
Despite pulling pricing 45bp–50bp tighter during bookbuilding, there was no major investor shakeout at final guidance with order books peaking at US$37bn, according to a banker on the deal.
"There was strong feedback for the rare high-quality EM issuer from global real money investors," said the banker.
The 144A/Reg S deal marks Petronas's first US dollar bond since it raised US$5bn across four tranches in 2015 – that deal being its first since 2009. The Malaysian government, rated one notch lower on the Moody's scale, has also stayed away from the US dollar debt market since 2016.
Petronas's latest offering came on a poor day for global oil prices, with the Brent crude benchmark sliding 6.7% to US$29.66. Last weekend's historic production pact between oil exporting nations, however, helped underpin sentiment, even though bankers stressed it had no impact on the timing of the deal.
A second banker on the deal said Petronas's primary objective was to position the credit at a narrow spread. Last month's market meltdown sent credit spreads soaring across the board, with Petronas's outstanding dollar bonds widening by more than 200bp. Its 4.5% 2045s hit 337bp over Treasuries on March 25, from 103bp a month earlier, and were around 292bp on Tuesday, according to Tradeweb.
The second banker on the deal put the new issue concessions at 5bp-15bp, while a banker away from the deal estimated them at 35bp, 30bp and 30bp for 10-year, 30-year and 40-year tranche.
Demand for the new deal confirms that the US dollar market has reopened for Asian issuers after last month's sell-off, albeit at very different pricing levels.
"In this market, the objective is to get size, it's not about pricing the market to the very last basis point," said the banker away from the deal.
The 40-year tenor – well beyond the Malaysian government's longest outstanding offshore benchmark at 2046 – reflected the issuer's strong credit and investors' appetite for duration in the current low-rate environment.
The bonds are said to have received orders of around US$23bn before the US open and a total of US$35bn at final guidance. Final distribution statistics were not available at the time of writing.
The bonds are trading around 40bp, 30bp and 40bp tighter for 10-year, 30-year and 40-year, respectively.
Wholly owned subsidiary Petronas Capital is the issuer and the parent Petronas is the guarantor.
The notes have expected ratings of A2/A– (Moody's/S&P) and will be drawn from a US$15bn global MTN programme.
Proceeds will be used for general corporate purposes, including capital expenditure and debt refinancing.
Bank of America and Citigroup were joint global coordinators as well as joint bookrunners with HSBC, Maybank and MUFG.