Petronas, Malaysia’s state-owned oil and gas giant, marked a significant milestone with its recent issuance of a US$5 billion senior multi-tranche bond. This move signals Petronas’ reentry into the international US dollar bond market after a hiatus of four years since its last offering in April 2021.
The bond issuance, initially planned at US$3 billion, garnered exceptional demand from investors, surpassing expectations with orders exceeding US$17 billion. This overwhelming response underscored investor confidence in Petronas’ financial health and strategic direction.
Proceeds from the bond, upsized from its initial target, will be allocated towards general corporate purposes, reinforcing Petronas’ liquidity position and funding capabilities for future endeavors.
“This US$5 billion issuance is not only Petronas’ largest from the oil and gas sector in Asia over the past five years but also represents a pivotal transaction in the international bond market since 2021,” a company spokesperson stated.
The offering consisted of three tranches: US$1.6 billion in 5.75-year notes offering returns at 4.95%, US$1.8 billion in 10-year notes with a yield of 5.34%, and US$1.6 billion in 30-year notes carrying a coupon rate of 5.848%. The competitive pricing strategy saw Petronas narrowing bond spreads by 30-to-35 basis points from initial guidance, reflecting robust investor appetite and favorable market conditions.
International investors across diverse categories, including asset managers, banks, insurers, pension funds, central banks, and sovereign wealth funds, participated in the oversubscribed offering. This broad investor base highlights Petronas’ global appeal and reinforces its position as a preferred investment choice in the energy sector.
Leading global financial institutions, including JPMorgan, Morgan Stanley, HSBC, Malayan Banking Bhd (Maybank), and MUFG, played crucial roles as joint global coordinators, bookrunners, arrangers, and dealers for this landmark transaction. Their expertise and market insights were instrumental in navigating the complexities of the global medium-term note market.
In summary, Petronas’ successful US$5 billion bond issuance not only strengthens its financial flexibility but also underscores its strategic resilience amidst evolving market dynamics. This achievement reaffirms Petronas’ commitment to sustainable growth and prudent financial management in the global energy landscape.
