The 2% March 8 2033s were priced at
105.097 to yield 1.565%, in the middle of
68bp–72bp guidance at EFP (10-year futures)
plus 70bp and 61.75bp over the April 2033
ACGB.
The Aaa/AAA rated semi-government
offering came 15bp tighter than the 85bp
EFP margin for Queensland’s July 2034s
issued a day earlier, which has a 16-month
longer tenor and one notch lower ratings
from Moody’s and S&P of Aa1/AA+.
The TCorp bond received bids of
!BNûATûTHEûlNALûPRICEûANDûHADûAûHIGHû
28% offshore allocation, with European and
UK investors taking 16% and Asia 12%. Asset
managers bought 76% of the bonds, bank
balance sheets 18%, bank trading 4% and
OFlCIALûINSTITUTIONSû
Fiona Trigona, head of funding and
balance sheet at TCorp, said: “This issuance
is a positive result for TCorp and means that
we have now raised 90% of our [A$17.0bn]
annual borrowing programme. We’re
absolutely delighted that we have attracted
new investors, further diversifying our
investor base.”
TCorp’s previous local syndicated
transaction was a record-equalling A$1.8bn
1.25% March 20 2025 sustainability bond
sale in November 2019.
It subsequently made its euro market
debut on February 14 with €60m of 0.609%
30-year Eurobonds.QUEENSLAND SECURES BROAD DEMANDQUEENSLAND TREASURY CORP (Aa1/AA+/AA)
attracted broad-based demand for last
Wednesday’s A$1.25bn (US$825m) sale of
1.75% July 20 2034 bonds, which will pre-
FUNDûTHEûSTATEûFUNDINGûARMSûlSCALûYEARû
ûDEBTûlNANCINGûREQUIREMENT
Citigroup, Deutsche Bank and Westpac were
JOINTûLEADûMANAGERSûFORûTHEûBONDS ûWHICHû
were priced at 99.872 for a yield of 1.76%,
within 82.5bp–86.5bp guidance at EFP (10-
year futures) plus 85bp, equivalent to 64.9bp
over the June 2035 ACGB.
Australian accounts were allocated 75%,
EMEA 12% and Asia 5%, while US investors
bought 8% of the 144A eligible offering.
Asset managers and insurance companies
TOOKû ûBANKûBALANCEûSHEETSû ûOFlCIALû
institutions 9%, trading desks 6% and hedge
funds 6%.
The 14.5-year print followed hot on the
heels of QTC’s A$1.5bn 4.75-year (November
û ûmOATING
RATEûNOTEûSALEûONû&EBRUARYû
19 that completed the state’s A$9.9bn
2019/20 funding requirement.ADB LISTS MASALA BONDS ON INXThe Triple A rated ASIAN DEVELOPMENT BANK has
sold Rs8.5bn (US$118m) of 10-year MasalaBONDS ûINûITSûlRSTû)NDIANûRUPEEûISSUEûSINCEû
2017.
The bonds carry a coupon of 6.15% and
were priced to yield 6.19%. They are
denominated in rupees, but settled in US
dollars.
Investors in Europe took 79% of the
bonds and those in the Americas 21%. Fund
managers booked 72% and banks 28%.
JP Morgan was sole underwriter.
The bonds will be listed on both the
Global Securities Market of India
International Exchange (India INX) and the
Luxembourg Stock Exchange. This is the
lRSTûTIMEûAûFOREIGNûISSUERûHASûHADûAû
primary listing for its securities on India
).8 ûWHICHûISûBASEDûINû'UJARATSû
INTERNATIONALûlNANCEûHUB û')&4û#ITY
The transaction brings ADB’s
outstanding rupee bonds to Rs72.4bn, or
US$1bn, with maturities stretching from
2021 to 2030.CORPORATES
US DOLLARS
CORONAVIRUS HITS AB INBEV AS
TOP-LINE GROWTH SLOWSBonds issued by the world’s largest brewer
ANHEUSER-BUSCH INBEV traded wide in the
secondary market on Thursday, after the
company reported a revenue dip due to the
coronavirus and demonstrated a lack of
clarity on how it will deleverage to
targeted levels.
The broader high-grade bond
market was trading wide last week
due to fears of the spreading virus,
but AB InBev particularly stood out in
a sea of red.
Three of the company’s bonds, rated
Baa1/A-/BBB, were among the top 10 most
actively traded on Thursday, according to
MarketAxess data.
The 5.55% 2049s, 4.75% 2029s and 4.9%
2046s were all trading some 15bp-20bp
wider through midday.
In the earnings report, much attention
was given to AB InBev’s exposure in China,
where the coronavirus has resulted in
US$285m in lost revenue and US$170m
IMPACTûTOû%BITDAûINûTHEûlRSTûTWOûMONTHSûOFû
the year.
AB InBev said full-year volumes declined
across all its main areas of business as
customers in China are not going out to
bars, restaurants or nightclubs amid
coronavirus concerns and in-home
channels saw meaningful declines as well.“Despite the current hardship, we do not
believe this crisis will impact the long-term
potential of our business given our
unparalleled brand portfolio, route-to-
market and talent pool,” AB InBev CEO
Carlos Alves de Brito said on an investor call.
But the market is also expressing
concerns regarding AB InBev’s path to
reaching two times debt to Ebitda from four
times leverage at the end of 2019.
To be sure, the company did a lot in 2019
to reduce debt. It sold its Australian business
to Japanese brewer Asahi for US$11bn in
July and followed that by raising US$5.75bn
in an IPO of its Asia unit.
Those asset sales allowed the company to
reduce debt by US$8.8bn year-on-year.
The beer maker even cut dividend
payments by US$2.8bn to US$5bn, which
HELPEDûINCREASEûFREEûCASHmOWûTOû53BN û
up from US$1.4bn a year earlier.
The company still has US$95.5bn of
outstanding debt and is sticking to its plan
to cut its leverage in half.MURKY PLANS
But with no more asset sales planned and
MANAGEMENTûREAFlRMINGûITSûDIVIDENDûLEVELSû
for 2020, the path to debt reduction is
murky, according to a CreditSights report.
Much like other companies in the food
and beverage space that are struggling to
drive growth after larger leveraged
acquisitions, AB InBev is looking to new and
existing brands to drive organic growth.
“In 2020, we’re increasing investment to
fuel this growth,” Alves de Brito said on the
call.
“We have big ambitions for Bud Light
Seltzer to grow our share in the fast-growing
hard seltzer category in which we’re
currently under-indexed.”
AB InBev should have some runway to
invest and expand those existing brands due
to a liability management exercise from last
year that effectively halved its near-term
debt maturities through 2025.
This new direction should keep the
company out of large M&A transactions, but
it is unclear if investments in premium beer
categories and seltzers will drive the growth
it needs.
“While such a change is usually good for
credit as it lowers leverage volatility through
the acquisition cycle, we view it as less so in
AB InBev’s case,” CreditSights said in its
report.
“This strategic move acknowledges that
the group’s performance since buying
SABMiller in October 2016 has left
management’s M&A ‘best-in-class’
credentials somewhat tarnished and likely
reduces a desire to deleverage rapidly to
create the headroom for the next piece of
large M&A.”30 International Financing Review February 29 20206 IFR Bonds 2322 p 25 - 43 .indd 30 28 / 02 / 2020 19 : 15 : 31