LONDON, Oct 17 (IFR) - Coming up in capital markets this week:
BIG DEBUT Saudi Arabia is widely expected to launch its first-ever international bond sale once a week-long investor roadshow comes to a close on Tuesday. A collapse in oil revenues has already pushed the kingdom into taking out a US$10bn bank loan and the debt sale will open up another source of funding for Riyadh to fill its gaping fiscal hole, which at US$97bn last year - some 18% of GDP - was one of the largest in the world.
Citigroup, HSBC and JP Morgan are leading the three-tranche deal of five, 10 and 30-year paper. And it could be a big one: Argentina’s US$16.5bn bond sale earlier this year illustrated just how much demand there is for emerging market sovereign exposure, and Saudi will be keen to tap into that. But, with plans to become a regular issuer, Riyadh might be wise not to fill its boots all at once. WELL WELL WELL It’s D-Day for PDVSA, as the deadline on a US$5.3bn bond swap passes today. The Venezuelan state oil firm hopes that swapping bonds maturing next year for ones that will be repaid in 2020 will cut it some financial slack at a time when low oil prices has left it facing an acute cash flow problem. The swap was supposed to close last week, but was extended at the last minute. Whether that was due to insufficient demand or just to tempt more should soon become clear. DRUG MONEY China Resources Pharmaceutical Group hopes to price its Hong Kong IPO on Thursday, the latest bumper listing to come out of the mainland. The drugmaker, a subsidiary of state-backed conglomerate China Resources (Holdings), is targeting proceeds of up to HK$15.6bn (US$2.02bn). Last week, the deal attracted combined cornerstone investment of about US$916m from eight investors. ON YOUR MARKS Having burned through cash to fight off competition and with US$2bn of maturities coming due in December, Sprint hopes to increase liquidity this week by selling off bonds backed by some of its wireless spectrum. Selling asset-backed paper should mean lower borrowing costs for the junk-rated telecoms provider. It is eyeing yields of around 5%, substantially lower than what it is used to paying in the high-yield market. DEJA VU Jeffrey Bradley has already taken two companies public in his career, and the Forterra chief executive hopes to make that three on Wednesday. The water and sewer pipe company is hoping to raise US$386.4m from its New York listing, in a deal that will raise funds to repay debt, including part of a senior term loan expanded to pay a US$345m dividend to private equity owner Lone Star in June. SHRUGGING IT OFF Banco de Credito Social Cooperativo will be meeting investors this week to market a Tier 2 transaction. The Spanish banking group, which includes Cajamar and dozens of other small regional lenders, clearly hasn’t been put off by jitters that have caught out other such deals. There is still no sign of a Tier 2 from Credito Valtellinese which was mandated in September, and Credem’s deal last week failed to materialise. RESULT! Bank of America, Goldman Sachs and Morgan Stanley will report third-quarter earnings. All eyes will be on whether they can mirror the surge in investment banking revenues seen at JP Morgan or whether it’s more the mixed picture reported by Citigroup last week. US banks are widely expected to issue bond deals once the earnings season is out the way. The first of those could come this week. NEWBIE IN TOWN The sterling high-yield market looks set to welcome a newcomer this week, with a company in the telecoms, media and technology sector planning a debut issue, according to bankers. The company had planned to come last week, but had to delay. The last TMT issuer to tap the sterling high-yield market was Virgin Media, which priced a unique receivables-backed deal on September 29. Last week in numbers Four - European listings cancelled, restructured or delayed last week 0 - Amount of Verallia payment-in-kind toggle bonds sold US$1.86bn - Investment banking fees earned by JP Morgan in Q3 US$21bn - Capital increase being eyed by Chinese brokerages IFR Awards Dinner - table booking now open The 22nd Annual IFR Awards Dinner takes place on January 24 at Grosvenor House, London. It will see 1,000 of the world’s most senior and successful capital markets professionals gather to celebrate industry excellence. And, this year, we are pleased to welcome back HRH The Princess Royal in her capacity as President of Save the Children. Visit IFRAwards.com to book your table. As with every year, tables are allocated on a first-come, first-served basis - so it is advisable to book early. (Reporting by Gareth Gore; Editing by Ian Edmondson)