Accessing the Global Capital Markets Through London - Sovereign, Supranational and Agency Bonds
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Accessing the Global Capital Markets Through London Sovereign, Supranational and Agency Bonds
1. Introduction to LSE Group
London Stock Exchange Group
An organisation with depth and breadth
Capital raising Trading Clearing & Settlement
Information Services Technology
3
London Stock Exchange Group
A global leader
$9 trillion $658 trillion $11 trillion
Total money raised on London Derivatives cleared in 2016 to Assets under management using
Stock Exchange in the last support G20 and global financial our benchmarks
decade stability
4
London Stock Exchange Group
A world-leading global markets infrastructure business
Capital Formation Risk & Balance Sheet Management Intellectual Property
2,300 14,000+ 9.6m 60.3m $11trn 10
Debt securities listed Since 1999, SwapClear Settlement Assets The top ten
Listed equity
on LSE Main Market. has cleared over 9.6 instructions benchmarked to investment banks
securities with
Overall money raised million OTC Interest received by Monte FTSE Russell’s and 97 of the top
aggregate market
exceeds $4.4 trillion Rate Swaps (IRS) Titoli (LSEG’s worldwide indices 100 asset managers
value of $7 trillion
making it the leading CSD) in 2015. all trust FTSE
IRS clearing service Russell indexes to
benchmark their
9 $260bn+ with the deepest pool of
liquidity across the investment
Equity deals in Raised by sovereign, entire yield curve 80 performance and
London raised regional and local
governments
$658trn FTSE Russell
create ETFs
over $1bn in 2016. LCH SwapClear calculates
95% cleared over $650 thousands of
SwapClear clears trillion in 2016 indexes that
measure and
$413bn
$5.5bn $49bn more than 95% of the
overall cleared OTC
supporting G20 and
global financial benchmark markets ETF assets
and asset classes in currently
Average order Over $49bn has interest rate swap stability
more than 80 benchmarked to
book equity value been raised through market
countries FTSE Russell
traded per day in 66 Sukuk issues on
indexes
London in 2016 London Stock
Exchange
London Stock Exchange Group is an international market infrastructure business at the centre of the world's financial community.
Over our 300 years of history, connecting international issuers and investors has been at the heart of our DNA.
5
A Global Community of Issuers
Our issuers operate in more than 115 different countries
Number of Companies
60 +
40-59
20-39
1-19
Source: London Stock Exchange statistics, based on country of primary business
6
Why Partner with London?
London: A Global Financial Centre
London is Europe’s largest capital market with
London is home to the International Forum of
a deep pool of liquidity and international
Sovereign Wealth Funds.
issuers and investors
London provides an ecosystem that promotes
London has a geopolitical role as a link to innovation and product development, e.g.
Asia and North America Islamic Finance, renminbi trading and Indian
Rupee internationalisation
London is a centre of excellence for a wide London has been voted the most attractive
range of audiences, products & legal global location for relocating/expanding asset
structures management operations
No. 1 FX Centre ⅓ Global Assets £6.8tn AUM 30% Int’l Listings 40% Int’l Ownership
37% of the world's currency A third of assets under The UK has the largest AUM 30% of the world's foreign 40% of the large and medium
exchanges take place here in management in the UK come in Europe (£6.8tn), and the equities are traded in London. sized asset management
London, more than New York from overseas clients, making second largest on a global firms in London are owned by
and Tokyo combined. it the most international global basis. overseas investors.
market.
Source: The Banker Magazine, TheCityUK.co.uk- Key Facts about the UK Fund Management Industry
7
2. Issuing Bonds on London
Stock Exchange
Benefits of a London Listing
Why global debt issuers choose London
London Stock Exchange is the global home of fixed income capital
Access to global investors
Efficient listing process
Access to liquid secondary markets
Significant profile raising
Competitive fees
Tailored suite of services
Note: This is not an exhaustive list of bond issuers active on our markets.
9
The World’s Fixed Income Market
London accounts for 70% of global secondary market bond trading
% of bond trading
by region
70% 30%
UK Rest of World
Source: TheCityUK estimates (2011)
World Federation of Exchanges (2011)
10A Choice of Debt Markets
A smooth listing process
Main Market International Securities Market
Applicable Regulation EU Regulated Market MTF Market
Reviewer UK Listing Authority London Stock Exchange
Listing Documents Full prospectus Admission Particulars
Designation Professional & Retail Professional only
Disclosure Obligations PD/MAR/TD LSE ISM Rulebook/MAR
• The International Securities Market is an exchange-regulated debt market. International Securities Market rules incorporate a number of
enhancements to enable an efficient listing process, including amongst other things, simplified requirements relating to incorporation by
reference and derogations as well as offering a simplified disclosure regime for certain issuers. In addition, there are specific provisions for high
yield, structured products, AT1’s and Islamic Finance which would enable an efficient listing process.
• ISM completes a comprehensive offering for fixed income in London, with great improvements also taking place on our regulated market,
including improved turnaround times and direct communication with the UK Listing Authority.
11‘Market Open’ in London
• A unique opportunity for companies, dignitaries and sponsors to open the market at
08:00 on the day of the event. This is filmed and can be accessed by international
• The London Stock Exchange TV stations broadcasted in the relevant regions. A photographer is also present. The
event would also includes speeches and presentation from senior management and
Market Open ceremony is a globally signing of the welcome book
recognised symbol of a world class
financial and business centre
• Synonymous with London’s unique
history as a home to domestic and
international business, the
ceremony reflects the expertise and
breadth of the London Markets
• The presence of international
media, investors and market
participants will present a unique
opportunity to highlight a successful
growth story
123. Sovereign, Supranational and
Agency Bonds
13Global Market for Supranational Issuers
430 £112bn 12
international international …in 29 currencies
raised
supranational bonds issuers…
Source: LSE data
14Global Hub for Sovereign Bond Issuance
Promoting a vote of confidence in countries’ economies
352 Bonds issued by sovereigns
75.5%
0.5% Europe
North A.
£1.58tn Raised 14.5%
Asia
4.5%
32 Countries 5% Africa
South A.
8 Currencies
Source: LSE Database, January 2017
15London’s Global Debt Markets
Recent notable transactions
Nigeria Egypt Kuwait
Nigeria’s first Diaspora Bond started Egypt raised $7bn on London’s debt In March 2017 the State of Kuwait raised
trading on London’s Main Market in capital market in the first half of 2017. The $8 billion in an oversubscribed
June 2017. Proceeds from the five- issue was more than three times international debt market debut. The $27
year, 5.625% bond will be used to fund oversubscribed, reaching over $11bn, billion book was the second biggest after
infrastructure projects in the country. demonstrating confidence in Egypt’s Saudi, reflecting the double-A quality of
The bond is the first from an African economy. Funding will support Egypt in State of Kuwait. The combined books for
country that is registered with both the financing its long term economic reform the two tranches peaked at $29 billion
UKLA and the U.S. SEC and targeted programme. HE Mr Amr El-Garhy, Minister enabling the leads to move pricing by
at retail investors. Interest in the bond of Finance, Egypt attended a market open around 30bp and 25bp to 75bp and 100bp
was high from retail investors around ceremony at London Stock Exchange to over US Treasuries for the 5 year and the
the world and was 130% subscribed, mark the issuance. 10 year tranche respectively. The issue
raising a total of $300 million. The bond was nearly 3.4 times oversubscribed.
follows the successful raising of $1.5
billion through Nigeria’s Eurobond
earlier this year.
Source: www.lseg.com
16Recent Sovereign Issuance
Diverse Pool of Investors
Kuwait Egypt Nigeria Israel Cyprus China Abu Dhabi
Issue Date 20 Mar 2017 31 Jan 2017 16 Feb 2017 18 Jan 2017 26 Jul 2016 2 Jun 2016 03 May 2016
Issue Size $3.5bn / $4.5bn $1.75bn / $1bn/ $1.25 bn USD 1bn €1.5bn / €750m EUR 1bn RMB 3bn $2.5bn / $2.5bn
Transaction
Details Coupon 2.75% / 3.5% 6.125% / 7.5% / 8.5% 7.875% 1.500% / 2.375% 3.750% 3.280% 2.125% / 3.125%
5 years / 10 years / 30
Maturity 5 years / 10 years 15 year 10 year / 20 year 7 year 3 year 5 year / 10 year
years
Country Rating AA / AA BB / B3 B / B+ / B1 A+ / A+ / A1 B1 / BB- / B+ AA- / A+ / Aa3 AA / AA
Profile GDP USD 114 billion USD 331 billion USD 481 million USD 297 billion USD 23 billion USD 11.38 trillion USD 178 billion
6%
2%
28% 1% 8%
26% 5% 29% 12% 15%
29% 63% 18%
19% 10% 24% 47%
Investor 28% 28%
4%
Distribution by n.a. 48% 6% 1% 4%
72%
Geography 37% 29% 47% 72% 17% 6%
13%
26% 24%
4% 61% 26%
38%
Demand 46% Asia Europe MENA Americas UK US Other
Distribution 1%
7% 7% 1%
4% 3% 3%
3% 1% 11%
8%
25% 24%
10% 51% 24%
68%
17% 41% 65%
Investor 13% 22%
Distribution by n.a. 62% 56%
73% 1%3% 2%
Type 13% 13% 6% 10%
5% 32%
79% 2% 46%
22% 60% 53% 44%
9%
Central Banks & Agencies Banks & Private Banks Fund Managers Hedge Funds Insurers & Pensions Funds Other
17Active Sovereign Bonds Market
Offering broad investor coverage
Amount
Coupon
ISIN Issuer Name Currency Raised Issue Date Maturity Date
(%)
($mm)
US65412AEK43 Republic of Nigeria 5.625 USD 300 27/06/2017 27/06/2022
US038461AK57 6.125 2,500 31/01/2022
31/01/2017
US038461AL31 Arab Republic of Egypt 7.5 USD 2,000 (tapped in May 31/01/2027
US038461AM14 8.5 2,500 2017) 31/01/2047
XS1582346703 2.75 3,500 20/03/2022
State of Kuwait USD 4,500 20/03/2017
XS1582346968 3.5 20/03/2027
US65412JAA16 16/02/2017
Republic of Nigeria 7.875 USD 1,500 (tapped in March 16/02/2027
XS1566179039 2017)
XS1551294256 1.5 1,500 28/01/2027
State of Israel EUR 750 18/01/2017
XS1551294413 2.375 28/01/2037
US87020DAY04 Kingdom of Sweden 1.125 USD 3,000 21/10/2016 21/10/2019
US87020DAX21 Kingdom of Sweden 1.25 USD 2,000 08/09/2016 08/09/2021
XS1457553367 Republic of Cyprus 3.75 EUR 1,000 26/07/2016 26/07/2023
XS1425436729 People’s Republic of China 3.28 CNY 3,000 02/06/2016 02/06/2019
US29134WAA53 2.125 2,500 03/05/2021
Abu Dhabi USD 03/05/2016
US29134WAB37 3.125 2,500 03/05/2026
18Active Sovereign Bonds Market
Offering broad investor coverage
Amount
Coupon
ISIN Issuer Name Currency Raised Issue Date Maturity Date
(%)
(mm)
XS1398547130 Hungary 6.25 CNY 1,000 25/04/2016 25/04/2019
US31788DAF15 Republic of Finland 1 USD 2,000 20/04/2016 23/04/2019
US87020DAW48 Kingdom of Sweden 1.125 USD 2,000 15/03/2016 15/03/2019
XS1377508996 Montenegro 5.75 EUR 300 10/03/2016 10/03/2021
XS1353178889 Republic of Finland 0.518 SEK 1,000 28/01/2016 28/01/2021
XS1321954551 Republic of Finland 1.625 GBP 400 17/11/2015 15/12/2020
XS1314321941 Republic of Cyprus 4.25 EUR 1,000 04/11/2015 04/11/2025
XS1267081575 Republic of Zambia 8.97 USD 1,250 31/07/2015 30/07/2027
XS1263054519 Republic of Kazakhstan 5.125 USD 2,500 21/07/2015 21/07/2025
XS1235186241 Republic of Finland 1 USD 1,500 21/05/2015 21/05/2018
XS1231271294 Kingdom of Sweden 1.125 USD 2,250 13/05/2015 15/05/2018
194. Selected Case Studies
Nigeria Issues its First 5-year Diaspora Bond
“Today, Nigeria records another milestone in international
Country Details Transaction Details capital markets as it lists its debut Diaspora Bond on London
Stock Exchange. The opening of this source of funding for
Nigeria and the listing of the Diaspora Bond on London Stock
Country Nigeria Issue Date 29 June 2017 Exchange will ensure that the opportunity to invest in Nigeria
will be available to a wider range of investors especially
Nigerians in Diaspora who wish to contribute to the
B+ (Fitch) Issue Size $300 million development of the country and also earn returns. Further
Rating
(P)B1 (Moody’s) issuances of the Diaspora Bond are planned to finance the
development of Nigeria’s infrastructure.”
Coupon 5.625% Dr. Abraham Nwankwo, The Director General of the
Sector Sovereign
Debt Management Office (DMO)
Market Main Market Maturity 5 years
Debt issuance story
The federal government of Nigeria issued its first
senior unsecured diaspora bonds in the
international capital market, raising the sum of $300
million at coupon rate of 5.625% (semi-annual).
The bond is the first from an African country that is
registered with both the UKLA and the U.S. SEC
and is aimed at Nigeria’s expatriate community.
Interest in the bond was high from retail investors
around the world and was 130% subscribed and
follows a successful raising of $1.5 billion through
Nigeria’s Eurobond earlier this year.
Joint Leads: Bank of America Merrill Lynch and the
Standard Bank of South Africa Limited
21State of Kuwait raises $8 billion in oversubscribed market debut Geographical Distribution
5Y 10Y
Country Summary Transaction Details
Company State of Kuwait Issue Date 20 Mar 2017 Americas 51% 24%
Rating AA / AA Issue Size $3.5 billion / $4.5 billion
MENA 26% 26%
GDP USD 114 billion Coupon 2.75% / 3.5%
Market Main Market Maturity 5 years / 10 years Europe 19% 46%
Asia 4% 4%
Country profile Debt issuance story
The issue marks the debut of the State of Kuwait The combined books for the two tranches Distribution by Investor
in the international debt markets. peaked at $29 billion enabling the leads to
move pricing by around 30bp and 25bp to
5Y 10Y
75bp and 100bp over US Treasuries for the 5
The $27 billion book is the second biggest after year and the 10 year tranche respectively.
Saudi, reflecting the double-A quality of State of Asset Managers 68% 60%
Kuwait. The issue was nearly 3.4 times
oversubscribed.
Banks 25% 22%
“Kuwait has scarcity value and is arguably the The deal priced inside Abu Dhabi’s curve.
Insurance / Pension
strongest credit in the Gulf Co-operation Council 4% 5%
Funds
from a balance sheet perspective” EM syndicate Joint leads: Citigroup, Deutsche Bank,
banker away from the deal. HSBC, JP Morgan, Standard Chartered and
SSA 3% 13%
KFH.
22Egypt comes back to the international debt markets with largest deal ever
from Africa
Country Summary Transaction Details
Company Arab Republic of Egypt Issue Date 31 Jan 2017
Rating BB / B3 $1.75 billion / $1 billion /
Issue Size
$1.25 billion
GDP USD 331 billion
Coupon 6.125% / 7.5% / 8.5%
Market Main Market
Maturity 5 years / 10 years / 30 years
Country profile Debt issuance story
The deal is the largest ever from an African The demand was so strong that the issuer
sovereign borrower, and the first triple tranche was able to increase the size of the deal from
note from the region. a planned $2.5 billion to $4 billion with books
peaking at $13.5 billion.
“Demand for the bonds was far higher than we
initially campaigned for. This shows that in-
vestors have strong confidence in our economy The 10 year bond was particularly “The Egyptian Finance Ministry’s successful international
and the reform measures we are taking.” Ahmed aggressively priced and came flat to fair capital raising programme showcases the strength and
Kojak, Deputy Finance Minister for Monetary value. profile of the Egyptian economy on the world stage and
Policies London Stock Exchange’s ability to support Egypt’s
economic reform programme. We are confident in Egypt’s
long term economic outlook and London Stock
“We had investors from across the globe, North Joint leads: BNP Paribas, Citigroup, JP Exchange as a leading international financing centre, is
America, Asia and the Middle East. We saw all Morgan and Natixis uniquely suited to help and facilitate financing Egypt’s
the big names in the fixed income universe as growth and prosperity.”
HE Amr El-Garhy, Minister of Finance, Egypt
well.” Borrower’s comment
23Nigeria issues longest ever offshore bond from a sub-Saharan African
Government
Country Summary Transaction Details
Country Nigeria Issue Date 16 Feb 2017
Rating B / B+ / B1 Issue Size USD 1 billion
GDP USD 481 billion Coupon 7.875
Geographical Distribution
Market Main Market Maturity 15 years
US 48%
UK 37%
Country profile Debt issuance story
Other Europe 10%
Nigeria returns to the international capital The deal was nearly 7.8 times
markets after 4 years. oversubscribed. Others 5%
The 15 year bond is the longest ever sold by a Orders rose to $4.5 billion before the leads
sub-Saharan African government in the Distribution by Investor
revised price guidance to 8.125%-8.375%
international capital markets. from the initial 8.5%, but remarkably the book Asset Managers 73%
kept growing as the leads tightened pricing.
“It is a great trade for sub-Saharan Africa and Hedge Funds 13%
shows that investors believe there has been
some good progress in Nigeria’s fundamental The proceeds will be allocated to long term Insurance / Pension Funds 10%
credit history. That can be seen through the fact capital projects such as roads and bridges.
Banks/Private Banks 3%
that the transaction was priced inside what
some investors initially considered a fair value.” Others 1%
Joint Leads: Citigroup and Standard
Khalil Belhimeur, CEEMEA syndicate Standard
Chartered Bank.
Chartered.
24Geographical Distribution
Israel opens 2017 international sovereign bond market with
oversubscribed deal 10Y 20Y
UK 29% 28%
Country Details Transaction Details
France 20% -
Company State of Israel Issue Date 18 Jan 2017
Germany 19% 48%
Rating A+/A+/A1 Issue Size €1.5 billion / €750 million
Rest of Europe 17% 9%
GDP USD 297 billion Coupon 1.5% / 2.375%
Switzerland 7% 4%
Market Main Market Maturity 10 years / 20 years
Israel 6% 6%
Asia - 4%
Country Profile Debt issuance story
Other 2% 1%
It is the first non-European sovereign to issue a This is the largest ever euro-denominated
euro-denominated bond of 20 year tenor. bond issued by the country as well as being its Distribution by Investor Type
first euro deal in 3 years.
“Israel has limited funding needs and 20 years 10Y 20Y
is a tenor they don’t necessarily need, but it The issue was over 4.3 times oversubscribed
allowed them to broaden and diversify into a Fund Managers 51% 32%
with the combined book for the two tranches
different and distinct pool of investors, such as closing at €9.8 billion. Insurance / Pension funds 24% 53%
German insurers, pension funds and high
quality accounts from Europe.” Vi Davda, Fixed The 2027 notes were priced at 87bp over mid- Banks / Private banks 17% 9%
Income Syndicate, Barclays. swaps, the cheapest financing the country
received since 2005, while the 2037 notes Governments / Central Banks 7% 3%
“Investors love Israel. It is very stable and has a were priced at 125bp over mid-swaps. Hedge Funds - 2%
good relationship with the rest of the world. It is
OECD, so gets the French bid and US Joint leads: Bank of America Merrill Lynch, Other 1% 1%
investors love them” Market appraisal. Barclays, and Citigroup.
25Cyprus bonds met with huge investor demand, allowing the sovereign Geographical Distribution
to price €1bn at their lowest ever yield UK 28%
US offshore 24%
Country Summary Transaction Details Europe (other) 16%
Country The Republic of Cyprus Issue Date 19 Jul 2016 Cyprus 14%
Rating B1 / BB- / B+ Issue Size EUR 1 billion Germany/Austria 12%
GDP USD 23 billion Coupon 3.750% Greece 5%
Market Main Market Maturity 7 years Middle East/Asia 1%
Country profile Debt issuance story
This was the first deal for Cyprus following the The bond was 2.6 times oversubscribed Distribution by Investor
clean exit from the Economic Adjustment signalling investor confidence in the country’s
Programme in March 2016, establishing a ongoing recovery. Fund Managers 62%
successful pricing reference within the new Banks/Private
context of the country. Despite being fully funded in the short term, 22%
Banks
Cyprus upsized the originally planned €500-
“A great deal, with a big book and tightened 750m offering to €1bn on the back of the Insurance/
8%
price. It’s good to see that all countries have strong investor demand, which also allowed Pension Funds
access to the market” Market comment, them to price the transaction at their lowest
GlobalCapital. yield ever. Hedge Funds 7%
Joint Leads: Barclays, JP Morgan, Morgan Other 1%
Stanley, Societe Generale and VTB Capital.
26China issues first ever sovereign RMB bond outside of China on London
Stock Exchange
Country Summary Transaction Details Geographical Distribution
Country China Issue Date 2 Jun 2016
Asia 72%
Rating AA- / A+ / Aa3 Issue Size RMB 3 billion
GDP USD 11.38 trillion Coupon 3.28% Europe 28%
Market PSM Maturity 3 years
Country profile Debt issuance story
In June 2016, the Ministry of Finance issued a The bond provided a rare chance for investors
Distribution by Investor
3.28%, three year bond that raised RMB 3 to gain Chinese sovereign exposure.
billion, marking a milestone for renminbi
internationalisation. The deal was more than two times Central Banks 41%
oversubscribed following strong demand from
The issuance cements London’s position as the central banks.
Banks 55%
leading western RMB hub, and reinforces the
UK’s ever-strengthening economic and financial The People’s Bank of China issued in London
relationship with China. RMB 5bn in one-year bills in 2015 in a sale Fund Managers 3%
that was more than six times oversubscribed.
“[The issuance] signals London’s success in
Private Banks 1%
building its position as the leading western hub Lead Managers: Bank of China Ltd, HSBC
for RMB, reflecting the UK’s continued ability to Bank Plc.
innovate and lead in new financial markets” , Rt
Hon George Osborne MP.
27Emirate of Abu Dhabi raises $5 billion from first bond sale in seven years
Country Summary Transaction Details Geographical Distribution
Country Abu Dhabi Issue Date 03 May 2016 5Y 10Y
Rating AA / AA Issue Size $2.5 billion / $2.5 billion MENA 47% 38%
GDP USD 178 billion Coupon 2.125% / 3.125% Continental Europe 18% 13%
Market Main Market Maturity 5 years / 10 years Asia 15% 6%
Americas 12% 26%
Country profile Debt issuance story
UK 8% 17%
The Emirate of Abu Dhabi has sold $5 billion The deal was one of the largest ever from a
in sovereign bonds for the first time since CEEMEA borrower and was Abu Dhabi’s first
2009 as Arabian Gulf governments turn to international bond in seven years.
debt markets amid weaker oil prices. Distribution by Investor Type
The sovereign printed the $2.5billion 5-year Abu Dhabi has two more bonds listed on
5Y 10Y
tranche at 85bps over US Treasuries with a London Stock Exchange which had raised $4
2.125% coupon and the $2.5billion 10-year billion USD at the time of issuance. The Fund Managers 65% 46%
tranche at 125bps over with a 3.125% coupon. Emirate last tapped investors with a bond in
April 2009, selling $1.5 billion in a 10-year Banks/Private
24% 44%
bond. Banks
The Abu Dhabi order book was more than 3
times oversubscribed, drawing $17 billion of Agencies 11% 10%
orders for the $5 billion dual tranche bond Joint Leads: Bank of America Merrill Lynch,
which was listed on London Stock Exchange. Citigroup and JP Morgan.
28Hungary becomes the first country from Continental Europe to issue an
RMB denominated sovereign bond
Country Summary Transaction Details Geographical Distribution
Country Hungary Issue Date 25 Apr 2016
Asia 72%
Rating BB+ / Ba1 / BB+ Issue Size RMB 1 billion
GDP USD 265 billion Coupon 6.25% Europe 28%
Market Main Market Maturity 3 years
Country profile Debt issuance story
In April 2016, the Hungarian Government Hungary became the first country in
issued a 6.25%, three year bond that raised Continental Europe to issue a renminbi-
Distribution by Investor
RMB 1 billion. denominated sovereign bond.
Banks 45%
“We believe RMB is going to be an The issuance proceeds will be used for
international currency, and play a key role in Asset Managers 39%
general purposes.
the global capital market in the coming years.
Our strategy is to get into the RMB market Private Banks 11%
now and establish a long term relationship The bond was at least 2.5 times
with the Chinese regulators and investors. oversubscribed.
From a public debt management perspective, Insurers 5%
we would like to have more diversification in
our portfolio, both in currencies and products”. Sole Lead: Bank of China.
György Barcza, chief executive of AKK.
29Cyprus Government taps the international capital markets on its way to Geographical Distribution
recovery UK 61.5%
Cyprus 13.5%
Country Summary Transaction Details Germany 7%
Country The Republic of Cyprus Issue Date 04 Nov 2015 Other Eurozone 7.5%
Rating BB- / B+ Issue Size EUR 1 billion Switzerland 3.5%
GDP USD 23 billion Coupon 4.25% Nordic 2.5%
Market Main Market Maturity 10 years US Offshore 2.5%
Other 2%
Country profile Debt issuance story
This was the third time since the start of the The bond was at least 3 times oversubscribed Distribution by Investor
economic adjustment program in 2013, that signalling the remarkable recovery of the
Cyprus tapped international markets. country. Fund Managers 52%
Banks/Private
Cyprus last issued a €1bn bond in April 2015 23.5%
with a maturity of seven years and a yield of €450mm of the proceeds were used to Banks
4%. All three issuances are listed on the Main exchange bonds maturing in the period 2019-
Insurance/
Market of the London Stock Exchange. 2020, while the remaining €550mm would 3%
Pension Funds
boost state cash reserves and help the
“It’s done. Successful market issuance of new management of public debt for the period Hedge Funds 21.5%
10-yr bond, EUR 1bn at 4.25%, lowest ever after Cyprus exits the financial support
program. Other 2%
pricing for a 10-yr bond for Cyprus,” Finance
Minister Harris Georgiades said on his Twitter
account. Joint Leads: Barclays, Goldman Sachs,
HSBC, Nomura.
30Kazakhstan prints a gigantic $4bn dual tranche bond on London Stock
Exchange
Country Summary Transaction Details
Country Kazakhstan Issue Date 12 Jul 2015
Rating Baa2 / BBB+ Issue Size $2.5billion / $1.5billion
GDP USD 4 billion Coupon 5.125% / 6.5%
Market Main Market Maturity 10 years / 30 years
Country profile Debt issuance story
The 2025 bond was printed at 98.976 to yield Kazakhstan is the first emerging-market
5.258%, or a spread of 285bp over US sovereign to tap international capital markets
Treasuries. The 2045 bond was issued at for 2015.
99.049 to yield 6.753%, or a spread of 335bp
over US Treasuries.
The note was one of the biggest issuances
from the CEEMEA region for 2015.
The 2025 bond was 2.4 times oversubscribed.
Joint Leads: Citi, JP Morgan Securities, Halyk
Finance AO, Kazkommerts Securities JSC.
The 2045 bond was 2.6 times oversubscribed.
31The UK is the first country outside the Islamic world to issue a Sukuk
Country Summary Transaction Details
Country United Kingdom Issue Date 02 Jul 2014
Rating AAA / AA+ / Aa1 Issue Size GBP 200 million
GDP USD 2.6 trillion Coupon 2.036%
Market Main Market Maturity 5 years
Country profile Debt issuance story
“Today’s issuance of Britain’s first sovereign The Sukuk uses the Al-Ijara structure, the most
Sukuk delivers on the government’s common structure for sovereign Sukuk, with
commitment to become the western hub of rental payments on property providing the income
Islamic finance and is part of our long term for investors. The Sukuk is underpinned by three
economic plan to make Britain the undisputed central government properties.
centre of the global financial system.” The sale, which came days before the start of
Ramadan, was 10x oversubscribed with orders
“We have seen very strong demand for the totalling more than £2.3 billion by investors in the
Sukuk, resulting in a price that delivers good UK, Middle East and Asia. Allocations have been
value for money for the taxpayer. I hope that the made to a wide range of investors including
success of this government issuance will sovereign wealth funds, central banks and
encourage further private sector issuances of domestic and international financial institutions.
Sukuk in the UK.” Joint Leads: Barwa Bank, CIMB Bank, HSBC
Bank, National Bank of Abu Dhabi, Standard
Chartered, HSBC.
32Nigerian Government taps the international capital Geographical Distribution
markets on its way to recovery 5 year 10 year
US 73% 57%
Country Summary Transaction Details UK 16% 25%
Country Nigeria Issue Date 12 Jul 2013 Other Europe 8% 12%
Rating B+/ BB- Issue Size $500 million / $500million Middle East &
1% 2%
Coupon 5.125% / 6.375% Africa
GDP USD 1.105 trillion
Maturity 5 years / 10 years Others 2% 4%
Market Main Market
Country profile Debt issuance story Distribution by Investor
The new deal comprised a $500m 5-year The two tranches were 4 times oversubscribed, 5 year 10 year
tranche paying 5.125% that was priced at 98.19 with slightly greater demand for the 10-year
79%
to yield 5.375% and a $500m 10-year tranche bond. Fund Managers 85%
paying 6.375% that was priced at 98.17 to yield
6.625%. Banks/Private
Nigeria has 3 international bonds listed on 5% 13%
London Stock Exchange raising a total of $1.5 Banks
The new 10 year bond was priced 37.5bps billion. Insurance/Pension
7% 2%
below the level Nigeria paid for its 10 year Funds
bond in 2010. Joint Leads: Citigroup Global Markets Inc,
Deutsche Bank Securities Inc. Hedge Funds 3% 6%
Both tranches traded well on their first day
buoyed by higher oil prices.
33EBRD Prices Oversubscribed US Dollar Benchmark Transaction
Company Details Transaction Details Geographical Distribution
European Bank of Reconstruction US 43%
Company Issue Date 17 Aug 2016
and Development (EBRD)
Asia 31%
Rating AAA / Aaa Issue Size USD 1.25billion
Europe 26%
Sector Supranational Yield at issue 1.233%
Market Main Market Maturity 4 years
Distribution by Investor
Central Banks/Agencies 42%
Company profile Debt issuance story
Banks/Private Banks 30%
EBRD is a multilateral developmental international The European Bank for Reconstruction took
financial institution founded in 1991 that uses advantage of a relatively quiet market in August to Asset/Fund Managers 27%
investments as a tool to build market economies. price a successful USD1.25bn 4 year transaction,
Initially focused on the countries of the former the issuer’s largest in any currency since their Corporates 1%
USD1.25bn in May 2013.
Eastern Bloc it expanded to support development
in 30 countries from central Europe to central Asia. The transaction garnered a book of around
USD1.4bn, which prompted EBRD to upsize the
The EBRD is owned by 65 countries and two deal from a planned USD1bn whilst pricing with a
intergovernmental institutions (EU and EIB). It minimal new issue premium.
maintains a close political dialogue with
governments, authorities and representatives of This was the issuer's first US dollar benchmark
civil society and works in cooperation with since the USD 1bn 7 year deal in February 2015.
international organisations such as the OECD, the
Joint Bookrunners: BMO, Morgan Stanley, TD
IMF, the World Bank and UN specialised Securities.
agencies.
34
34IADB’s largest ever deal, beating the previous record of $3.5bn sold
exactly one year before
Company Details Transaction Details Geographical Distribution
Company Inter-American Development Bank Issue Date 12 April 2017 Americas 48%
Rating AAA/Aaa EMEA 17%
Issue Size USD 3.75 billion
Sector Supranational Asia 35%
Coupon 1.625%
Market Main Market
Maturity 3 years
Company profile Debt issuance story
Inter-American Development Bank is the The deal was nearly 1.5 times Distribution by Investor Type
largest source of financing for economic, social oversubscribed.
Asset Managers 21%
and institutional development in Latin America
and the Caribbean. Central Banks/Official Institutions 61%
The book was one of the largest ever and also
had the record number of accounts Banks 15%
participating at 88.
Seeking to build a curve in dollars, the
Pension
company tends to do four deals a year. 3%
Funds/Insurance/Corporates
The books closed at the same price as
Sweden, which is the tightest SSA deal since
The issue raised approximately 50% of the May 2015.
entire borrowing programme set by the
company for 2017.
Joint Leads: Citi, Deutsche Bank, Nomura,
RBC Capital Markets.
35
35IFC’s first Social Bond Program raises $500 million for women-owned
companies and low income communities in developing countries
Company Details Transaction Details Geographical Distribution
Company International Finance Corporation Issue Date 30 March 2017 Americas 52%
Rating AAA/Aaa Issue Size USD 500 million Europe, Middle East, North Africa 34%
Sector Supranational Coupon 1.75% Asia Pacific 14%
Market Main Market Maturity 3 years
Company profile Debt issuance story
IFC is one of the world’s largest financiers of The deal was nearly 1.4 times oversubscribed. Distribution by Investor Type
climate-smart projects for developing
countries. Fund Managers 55%
The books opened at mid-swaps minus 4bp and
saw steady progress, leading to an improvement Central Banks/Official Institutions 34%
IFC has issued themed bonds as part of its
by one basis point. Orders peaked at $700
funding program since 2010 when the Green Banks 11%
million before books closed at $675 million.
Bond Program was founded.
IFC Social Bond Program streamlines two The proceeds will be allocated to IFC projects
existing themed bond products – the Banking that aim to address access to essential services,
on Women Bond Program and the Inclusive income generation etc. to underserved target
Business Bond Program – into one viable populations in developing countries.
program aligned with the Social Bond
Guidelines as published by ICMA. Joint leads: Citi, Crédit Agricole, JP Morgan.
36Using innovative capital-market mechanisms to prevent deforestation in
developing countries
Company Details Transaction Details Key Investors
International Finance Corporation Issue Date 04 Nov 2016 CalSTRS Californian pensions giant
Company
(part of World Bank Group)
Issue Size USD 152 million Treehouse
Emerging Markets-focused investor
Rating AAA/Aaa Investments
Coupon 1.546%
Sector Supranational TIAA-CREF Teachers’ pension fund
Maturity 5 years
Market Main Market QBE Insurance
Company profile Debt issuance story
IFC is one of the world’s largest financiers of This is world’s first-of-its-kind bond giving
climate-smart projects for developing countries, investors choice between a cash or carbon-
investing about $19 billion in long-term financing credit coupon. Investors choosing the latter can
over the last decade for that purpose. retire them to offset corporate greenhouse gas
The bond was developed with BHP Billiton and emissions, or sell them on the carbon market.
Conservation International. BHP is a global IFC will buy carbon credits from the Kasigau
mining, metals, and petroleum company. Corridor REDD project in Kenya with BHP
Conservation International is a global non profit Billiton providing a price-support mechanism.
environmental organization. The proceeds will be used to support private
“IFC’s Forests Bond demonstrates the power of sector development and prevent deforestation
innovative capital-market mechanisms to unlock in developing countries.
private sector funds for forest protection.” Joint leads: BAML, BNP Paribas, JP Morgan.
Jingdong Hua, IFC Vice President
Source: IFC press release, LSEG database, November 2016
37NTPC returns to the Masala bond market and achieves tighter pricing
Transaction Details Distribution by Investor
Company Details
Issue Date 03 May 2017 Central Bank / Sovereign
Company NTPC Ltd 50%
Wealth Funds
Issue Size INR 20 billion
Rating BBB-* Asset Managers/ Fund
Yield at issue 7.28% 30%
Managers
Sector Utilities Coupon 7.25% Banks 14%
Market ISM Maturity 5 years Private Banks 6%
Company profile Debt issuance story
Geographical Distribution
NTPC is India’s largest power utility company. NTPC Limited priced its second INR
The company’s headquarters are in New Delhi denominated Masala Bond becoming the only Asia 83%
and its core business involves generating and Sate Owned Enterprise to tap the Masala Europe 14%
selling electricity to state-owned power Bonds market twice.
distribution companies and State Electricity The issue was priced 20bps tighter than the US 3%
Boards in India. issuer’s previous 5 year Masala bond of the
same size, issued in August 2016.
"The listing of NTPC Masala Bonds on ISM as the maiden
It was founded by Government of India in 1975 Proceeds of the bond will be used to finance issue on the exchange marks the growing cooperation
and in May 2010 was conferred Maharatna capital expenditure of ongoing and new power between NTPC and LSE, this being the second time NTPC
status. projects. has listed its Notes on LSE. To NTPC and other issuers
from India and across the globe, this provides an
The deal was 1.4 time oversubscribed and saw opportunity to access quality investors for meeting our
INR28b orders from 40 accounts. financing needs. The tremendous response to NTPC
Joint Leads: Axis Bank, Barclays Bank, ICICI, Masala Bonds enthuses us to look at offshore funds as a
MUFG, and Standard Chartered Bank. regular source of financing our Capex needs."
Kulamani Biswal, Director (Finance), NTPC
*Fitch & S&P
38NTPC lists world’s first green Masala bond by an Indian issuer on London Distribution by Investor
Stock Exchange Banks 15%
Transaction Details Fund managers/insurers/
Company Details 80%
sovereign wealth funds
Issue Date 10 Aug 2016
Company NTPC Ltd Private Banks 5%
Issue Size INR 20 billion
Rating BBB-(emr)*
Yield at issue 7.48% Geographical Distribution
Sector Utilities Coupon 7.375% Asia 70%
Market PSM Maturity 5 years Europe 30%
"We are keen to tap a new and international investor base
Company profile Debt issuance story for our renewable energy programme and access offshore
financing without the associated exchange risks, which we
can achieve through this issuance on London Stock
NTPC is India’s largest power utility company. The The proceeds of the bond will be invested to Exchange.
company’s headquarters are in New Delhi and its support wind and solar projects complementing
core business involves generating and selling India’s government ambition to generate 175GW We are also grateful to London stock Exchange for guiding
electricity to state-owned power distribution of renewable energy by 2022. us through the process of Listing and attracting
international investors into the first ever Green Masala bond
companies and State Electricity Boards in India. The deal was oversubscribed, with books in offering from India"
It was founded by Government of India in 1975 excess of INR 29 bn from more than 60 accounts. Kulamani Biswal, Director (Finance), NTPC
and in May 2010 was conferred Maharatna status. The green certification gave NTPC a global boost "The investor reach gets enhanced. The green investors in
NTPC established a Green Bond Framework and, as a result, better pricing. Notable was Europe and the US have invested in this issue in addition to
the normal investor"
which has been independently certified by Climate NTPC's investor diversification internationally and
Shashikant Rathi, Head of Treasury and Debt Capital Markets,
Bonds Initiative, a partner of London Stock the company’s ability to attract participation by Axis Bank (Joint Lead)
Exchange and adheres to the ICMA Green Bond dedicated green bond funds from Germany and "From an issuer perspective, it made more sense to do a
Principles. Denmark into the deal. Green Masala instead of just a Masala because there is
Post issuance, KPMG will provide assurance that Joint Leads: Axis Bank Ltd, Hong Kong & additional liquidity provided by dedicated green investors
and they can get pricing traction from the additional
the nominated projects are in alignment with the Shanghai Banking Corporation, Standard demand,"
company’s Green Bond Framework. Chartered Hong Kong, Mitsubishi UFJ Financial. Jujhar Singh, Co-head of HY, Standard Chartered (Joint Lead)
*Fitch emerging markets bond rating
39National Highways Authority of India (NHAI) chooses London for its first
global offshore Masala bond
Company Details Transaction Details
National Highways Authority Issue Date 11 May 2017
Company
of India (NHAI)
Issue Size INR 30 billion
AAA (Fitch national, Crisil &
Rating Yield at issue 7.3%
ICRA)
Sector Government Agency Coupon 7.3%
Distribution by Investor
Market Main Market Maturity 5 years
Fund Managers/ Insurers 61%
Company profile Debt issuance story
Banks 18%
The National Highways Authority of India (NHAI) is an This is the largest inaugural transaction in the
autonomous agency of the Government of India and Masala bond market as well as the largest ever five- Private Banks 21%
has a strategically important role for the Indian national year issuance.
economy.
NHAI’s issue supports the Indian government’s
NHAI manages a network of over 70,000 km of long-term funding needs for infrastructure Geographical Distribution
National Highways and has the biggest roadbuilding expansion
programme in the world, with sustainability a focus. Asia 60%
The initial benchmarked issue of INR 15 billion was
Our Government is fully committed to bridge the upsized to INR 30 billion due to the highly positive Europe 40%
infrastructure deficit in the country. Improvement in the response from investors across the spectrum,
quality of connectivity across the length and breadth of showing bright prospects of the Masala bond as an
India will help us achieve the vision of our Government international rupee financing instrument
of ‘Sabka Saath Sabka Vikaas’“, Shri Nitin Gadkari,
Minister of Road Transport & Highways and Shipping Joint Leads: Axis Bank Singapore Branch, Nomura,
SBICAP (Singapore), Standard Chartered
40Islamic Development Bank becomes the first company to issue a Sukuk after
US election
Company Details Transaction Details Geographical Distribution
Islamic Development Issue Date 07 Dec 2016 MEA 72%
Company
Bank
Issue Size USD 1.25 billion Asia 25%
Rating N/A
Europe 3%
Coupon 2.263%
Sector Supranationals
Market Main Market Maturity 5 years
Company Profile Debt issuance story
Distribution by Investor
Islamic Development Bank is multilateral When the books opened orders reached $1
development financing institution located in Saudi billion in just a day. The deal priced inside its Central Banks and
Arabia. IDB is owned by 56 member countries of secondary curve at 45bp over mid-swaps. 90%
Agencies
the Organisation of Islamic Cooperation (OIC) that
span across the Middle East, Africa, Asia and The deal priced at a lower spread compared Banks and Private Banks 10%
Europe. with IDB’s March 2016 issuance, which was
priced at 50bp over mid-swaps.
The purpose of the Bank is to foster the economic “Our choice of London as the location to list our new $1.25bn
development and social progress of member Overall, the deal saw strong participation from Sukuk is driven by the continuous support that London Stock
countries and Muslim communities individually as money managers and official institutions, which Exchange has for both the Islamic Development Bank and for
well as jointly in accordance with the principles of showed confidence in IDB’s credit strength. Islamic Finance. We look forward to continuing this
partnership in developing Islamic Finance.”
Shari'ah i.e., Islamic Law.
Dr. Ahmet Tiktik, Vice President Finance & CFO,
Joint leads: Boubyan Bank, Credit Agricole, GIB Islamic Development Bank
IDB is rated AAA by Standard & Poor's, Moody's, Capital, JP Morgan, Mizuho, National Bank of
and Fitch. Abu Dhabi, Natixis, RHB, Standard Chartered.
41Contacts
42London Stock Exchange’s Fixed Income Team
Primary Markets
Global Head of Fixed Income Pietro Poletto +44 20 7797 4294 Pietro.Poletto@lseg.com
UK Head of Fixed Income Darko Hajdukovic +44 20 7797 3306 DHajdukovic@lseg.com
Fixed Income Product Specialist Lillian Georgopoulou +44 20 7797 3482 EGeorgopoulou@lseg.com
Fixed Income Product Specialist Elena Chimonides +44 20 7797 1509 EChimonides@lseg.com
Fixed Income Product Specialist Omair Mohyal +44 20 7797 3319 Omohyal@lseg.com
Fixed Income Product Specialist Alexander Imseeh +44 20 7797 3750 AImseeh@lseg.com
Fixed Income Sales Associate Sarah Ellena +44 20 7797 3872 SEllena@lseg.com
Secondary Markets
Global Co-Heads of Equity, Funds, Fixed Income Pietro Poletto +44 20 7797 4294 Pietro.Poletto@lseg.com
Brian Schwieger +44 20 7797 3860 BSchwieger@lseg.com
43
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