MMK USD500m 4.375% Jun 24

  • By Francesca Young, Lewis McLellan
  • 06 Jun 2019
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Rating: Baa2/BBB-/BBB

Amount: $500m Reg S/144A

Maturity: 13 June 2024

Issue/fixed reoffer price: 100

Coupon: 4.375%

Spread at reoffer: mid-swaps plus 249bp; May 2024 US Treasury plus 250bp

Launched: Wednesday, June 5

Payment date: June 13

Joint books: Citi, JP Morgan, Société Générale

Bookrunners’ comment:

Initial price thoughts were at 4.75% area for a $500m Reg S/144A five year no-grow.

When the book reached $1.4bn, guidance was updated to 4.625%.

The book grew to $1.8bn, allowing the leads to revise guidance further to 4.5% area. The book peaked at $2.2bn. Around $200m of orders fell away at the final spread of 4.375%.

We priced with no, or possibly even a negative, new issue premium.

We wanted to get as close as possible to fair value. We had various options in terms of how to derive it, but NLMK was the target. The strategy we selected was to start at 4.75% and aim to go through 4.5%. The overall timing worked out very well. The Fed announcement helped sentiment. As MMK is a domestic player it helps as a rate cut plays in their favour and they’re not exposed to import taxes.

With US rates likely to go down, investors are keen to buy bonds that offer a higher high spread to US Treasuries in order to preserve overall yields. People want to grab something high quality at relatively high spread to Treasuries. So it was just the right momentum.

Most of the questions were about the business model, not sanctions, and them coming back to market as they hadn’t been for a long time. From the issuer’s point of view, they felt it was important for the company to put their dot on the map and establish a presence with international investors and improve its capital structure. It had negative net leverage, which is now positive and that maximises the value of company.

The company wanted to keep the Russian portion of distribution to a minimum. They wanted a focus not just on pricing, but also on getting a diverse investor base. Going forward, they’ll be more relaxed on allocations.

The bonds were trading around 100.1-100.3 on Thursday. It’s unlikely that MMK will return to the bond markets again this year.

Geographical distribution

US 31%

UK 17%

Russia 15%

Switzerland 15%

Other Europe 14%

Asia 8%

Investor distribution

Asset managers 58%

Banks/private banks 30%

Insurance 7%

Hedge funds 5%

Market appraisal:

“…it shows appetite for Russian corporate risk is very high. Curves are still tight and we’re concerned about that, but it was strongly oversubscribed and seems to have gone really well.”


  • By Francesca Young, Lewis McLellan
  • 06 Jun 2019

Bookrunners of International Emerging Market DCM

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 JPMorgan 16.96 84 10.49%
2 Citi 16.47 74 10.18%
3 HSBC 13.06 94 8.08%
4 Standard Chartered Bank 8.51 60 5.26%
5 BNP Paribas 8.28 55 5.12%

Bookrunners of LatAm Emerging Market DCM

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 Santander 4.35 19 13.01%
2 JPMorgan 3.89 18 11.62%
3 Citi 3.70 18 11.05%
4 Morgan Stanley 2.60 9 7.78%
5 BNP Paribas 2.42 9 7.23%

Bookrunners of CEEMEA International Bonds

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 JPMorgan 6.94 29 14.41%
2 Citi 5.72 20 11.86%
3 HSBC 5.08 24 10.54%
4 Standard Chartered Bank 4.14 19 8.60%
5 Goldman Sachs 2.95 6 6.12%

EMEA M&A Revenue

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 JPMorgan 0.20 50 10.55%
2 Goldman Sachs 0.16 37 8.77%
3 Morgan Stanley 0.14 46 7.64%
4 Bank of America Merrill Lynch 0.11 33 6.18%
5 Citi 0.10 35 5.16%

Bookrunners of Central and Eastern Europe: Loans

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 ING 1.57 13 8.92%
2 Credit Agricole CIB 1.53 7 8.68%
3 MUFG 1.24 5 7.08%
4 Sumitomo Mitsui Financial Group 1.16 8 6.61%
5 UniCredit 1.04 10 5.91%

Bookrunners of India DCM

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 HSBC 1.12 9 17.54%
2 JPMorgan 0.92 8 14.49%
3 Standard Chartered Bank 0.88 8 13.92%
4 Barclays 0.82 7 12.82%
5 MUFG 0.72 6 11.36%