PTT raises $700m from 50-year bond
3.7% yield for Asia's longest-dated corporate issue in US currency
published : 10 Jul 2020 at 14:19
HONG KONG: PTT Plc, Thailand’s largest energy company, raised US$700 million from the sale of a 50-year bond in Asia's longest dollar corporate debt deal, and bankers believe the shift toward longer-dated terms in the region will continue.
The bonds were priced to yield 3.7% in the deal that was executed overnight Thursday, according to a term sheet seen by Reuters.
It is the longest term for a dollar-debt transaction in the Asian region for a corporate issuer, according to bankers who worked on the deal.
In April, Indonesia was the first Asian sovereign issuer to sell a 50-year tranche as part of a deal which raised $4.3 billion. The 50-year portion of that deal raised $1 billion.
PTT is 51% owned by the Finance Ministry.
A debt capital markets banker who worked on the PTT deal, but could not be identified as he was not authorised to speak to media, said longer-dated corporate bonds could become more common in Asia.
"For high quality names moving towards longer date deals is not that difficult, we have seen some 40-year transactions already," he said.
"We are not jumping from 10-year deals to 50-year deals, we are moving there gradually and investors are becoming more receptive to longer dated issuances.”
Demand for longer dated debt is driven by pension funds looking for assets which match their far-distant liabilities and record low interest rates around the world have reduced the cost for companies carrying out the deals.
PTT’s term sheet showed the company would use the proceeds to fund capital expenditure and lending to other companies within the PTT Group.
In May, PTT said it would reduce investments in 2020 by 10% to 15%, deferring investments that were not priorities.
The decision came as it recorded a first quarter loss of 1.55 billion baht, which was the first loss in four years.