However, after taking the deal to investors at an indicative range of 35bp to 38bp over mid-swaps, the deal priced at the tight end of guidance with an order book two-times oversubscribed.
The A3/A- deal was priced at 99.864% on a coupon of 5.63%, offering a yield of 5.643%. That is equivalent to 35bp over mid swaps or 89.25bp over Treasuries.
Fees were undisclosed.
The order book closed with 75 accounts being allocated paper. Geographically Asia bought 39%, Europe 28%, US accounts bought 25%, Japan 5%, Australia 3%. In terms of investor type; 26% went to banks, 28% to pension funds, 22% to central banks, 15% to funds, and 9% corporations.
An order book so geographically diverse was a welcome relief to offshore investors. PMBÆs previous deal struggled to gain momentum from US and European accounts because of the presence of too many domestic accounts, many of which were government-owned. International investors feared that such a high ratio of domestic, government-controlled companies would rapidly sell their allocations in the secondary market.
This time around the order book is dominated by buy and hold-inclined accounts which should allow the deal to maintain a strong performance in the secondary trading.
In terms of relative value; PetronasÆ 2012 is currently trading at 28bp over Libor, while its 2022 is trading at 54bp over û a curve of 26bp.
Additionally, on an asset swap basis, Malaysian 10-year CDSÆ currently sit at around the 36bp-37bp range. Meaning that on a like for like basis PMB comes inside of these benchmarks.
Arguably, this is a very impressive end result for what many market specialists have called a problematic credit, in a very difficult market environment. Treasuries have pushed out almost 15bp over the past seven trading days.
The dealÆs performance will now hinge on the release of Friday's non-farm payroll numbers. With emerging markets already in a downward pattern, the results will dictate how favourably those markets will perform. Currently, market consensus has non-farm payroll numbers coming in at around 210,000. A benign number should see a spike in emerging market credits, however analysts say anything over and above 300,000 will force emerging market debt to tumble, dragging PMB down to an estimated low 40Æs.
