KUALA LUMPUR: Axiata Group Bhd has secured the lowest-ever borrowing cost by an Asian corporate, as yield hungry global investors shrugged off concerns about the pandemic in search of quality offerings.
The telecommunication company, on Thursday, said it has successfully priced a dual- tranche offering comprising 10-year US$500mil Sukuk and a 30-year US$1bil conventional notes.
The debt papers will be issued via its wholly-owned special purpose vehicles - Axiata SPV2 Bhd and Axiata SPV5 (Labuan) Ltd, respectively.
The Issuances have been assigned expected ratings of Baa2(s) and BBB+(s) by Moody’s Investors Service Inc and Standard & Poor’s Ratings Services, respectively.
Final orderbooks in aggregate were US$6.8bil, Axiata said in a statement today, making it one of the most oversubscribed deals in Asia over the last 12 months.
The book building exercise conducted yesterday commenced with an initial price guidance of US Treasuries 10-year + 200 basis points (bps) and UST 30-year + 220bps for the Sukuk and Notes, respectively.
"Strong investor interest towards the Issuances, as indicated by the staggering peak orderbook size of approximately USD11.8bil across the two tranches, led to a price tightening of 52bps and 50bps for the Sukuk and Notes respectively, with the final price guidance set at UST + 150 bps area for the Sukuk and UST + 170 bps area for the Notes," Axiata said.
It marked Axiata’s first landmark issuance of US$1.5bil in size from the international capital markets and its single largest as well as longest dated offering to-date.
The strong cross- border participation from a wide and diverse base of investors "has enabled us to achieve the lowest ever 30-year coupon for an Asian telecommunications issuer, and the third lowest, globally," Axiata’s President & Group Chief Executive Officer, Tan Sri Jamaludin Ibrahim said.
“In addition to demonstrating Axiata’s ability to access the debt capital markets, this successful conclusion further affirms international investors’ confidence in the long-term fundamentals and resilience of the Malaysian economy and its ability to swiftly scale towards recovery in the aftermath of COVID-19 triggered challenges,” he added.
The proceeds from the issuances will be partially used to refinance Axiata’s existing borrowings and the balance to be used for its general corporate purposes.
“Despite having gone to market under the ‘new normal’ circumstances, Axiata was able to successfully capitalise on the historical low interest rate environment to achieve our objectives of optimising our debt maturity profiles and reducing our financing costs which will translate to better preservation of liquidity for the Group." Deputy Group Chief Executive Officer Datuk Izzaddin Idris said.
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