PETRONAS Prices $3.0B Bond Offering

Source: 4/22/2021, Location: Asia

PETRONAS has successfully priced a US$3.0 billion dual-tranche senior bond offering, comprising US$1.25 billion 10.75-year and US$1.75 billion 40-year conventional notes. The 10.75-year senior notes were priced at 92.5 basis points (bps) over the 10-year US Treasury yield for a coupon of 2.480 per cent, and the 40-year senior notes were priced 115 bps over the 30-year US Treasury for a coupon of 3.404 per cent.

Key highlights of the transaction include:
- Lowest coupon and tightest issue spreads ever achieved by PETRONAS and any other Malaysian corporations in both the 10-year and 40-year bond tranches
- PETRONAS achieved final pricing of 42.5 bps and 40 bps lower than its initial price guidance for the 10.75-year and 40-year bond tranches, respectively. The yields achieved on both tranches were lower than PETRONAS’ existing secondary curve and borrowing costs
- The highly sought after 40-year bond tranche was the largest ever by an ASEAN issuer and priced at a mere 22.5 bps over the 10.75-year bond yield – a far tighter spread than that achieved by most international and ASEAN issuers
- Supported by strong investor demand, PETRONAS was able to upsize the transaction size to $3 billion based on total demand of US$7.4 billion – more than 2.46 times the enlarged issuance size
- The bonds were distributed to top tier international investors across the globe – with the 10.75-year distributed to investors in Asia (48 per cent), USA (43 per cent), and Europe and the Middle East (9 per cent); the 40-year distributed to investors in USA (46 per cent), Asia (40 per cent), and Europe and the Middle East (14 per cent).

This issuance follows the US$600 million bond offering issued by PETRONAS Energy Canada Ltd. and guaranteed by PETRONAS in March 2021, and the previous US$6 billion multi-tranche offering in April 2020. Use of proceeds will be for debt refinancing and general corporate purposes, thereby further optimising the balance sheet and extending PETRONAS’ debt maturity profile.

BofA Securities and Citigroup acted as Joint Global Coordinators and Joint Bookrunners, together with HSBC, Maybank and MUFG as Joint Bookrunners.

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