HONG KONG--The parent of China's largest oil refiner raised $6.4
billion in a bond sale that ranked as Asia's third-biggest on
record, with some of the lowest borrowing costs ever for an Asian
company thanks to Europe.
The offering by state-owned China Petrochemical Corp., also
known as Sinopec Group, is exceeded only by Alibaba Group Holding
Ltd.'s $8 billion debt sale in November and Bank of China Ltd.'s
$6.5 billion offering that beefed up its capital in October,
according to data provider Dealogic.
By tapping European investors, Sinopec was able to borrow at
costs as low as 0.5% and 1% for its three- and seven-year bonds,
totaling 1.5 billion euros ($1.6 billion). The timing was
especially fortuitous for the company as the benchmark 10-year
German bund sank to a low of 0.07% Monday under pressure from
aggressive European Central Bank measures to stimulate the sluggish
economy.
The rest of the debt, sold in dollars with coupons between 2.5%
and 4.1% and lengths up to 30 years, attracted more than $15
billion in subscriptions.
The heavy subscription by investors underscores increased demand
for the higher yields in emerging markets, especially if they are
backed by governments. It also suggests investors are shrugging off
concerns over energy companies as oil prices start to rebound, and
they are still buying despite the likelihood of a U.S. Federal
Reserve rate increase this year that would send yields higher.
Sinopec Group--the parent of Hong Kong-listed China Petroleum
& Chemical Corp., or Sinopec Corp.--plans to use the proceeds
to refinance existing debt and for "general corporate purposes" of
overseas businesses, according to its prospectus.
The deal surpassed Sinopec Group's own $5 billion bond issue a
year ago and Indonesia's sale of $4 billion in sovereign debt in
January last year.
The lower oil price will result in "a big drop" in profit for
Sinopec Group and its units and weaken their credit metrics,
Moody's senior analyst Chenyi Lu said, but the group's "good
business diversity, conservative capital spending and strong access
to liquidity will help preserve their financial profile." The
agency rates the company at Aa3, among top of investment-grade
ratings.
Write to Fiona Law at fiona.law@wsj.com
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