Tenaga returns to bonds after long lay-off

After more than a decade away from the debt markets, Malaysia's Tenaga returned this week.

Malaysian electricity company Tenaga had been away from the dollar bond market for more than a decade. But this week the company broke its fast, raising $750 million from investors.

When Tenaga last came to the bond market in 2005, US interest rates were on their way up, China’s economy was smaller than the United Kingdom’s, and Donald Trump was a just real estate developer. But the company made its return this week, diversifying its funding sources by turning to a mix of European, Asian and Middle Eastern investors.

The bookrunners were left scratching around when it came to pricing comparables. Malaysian corporations tend to meet their funding targets from a mix of bank loans and domestic bond issuance, making dollar deals from the country reasonably rare.

But there were enough outstanding issues for bankers to guide pricing discussions. One obvious comparable was the Malaysian sovereign, since Tenaga is state-owned. But the leads also needed a strong corporation to use as a bellweather. They settled on Axiata Corp, one of the country’s best-known companies.

Malaysia’s outstanding April 2026 bonds were trading at a G-spread of around 107bp when the new deal was launched, equivalent to a 110bp to 115bp spread after curve extension. Axiata’s March 2026 notes were offering a G-spread of 158bp, or 160bp to 165bp after extension, said a banker close to the deal.

Tenaga priced its $750 million 10-year sukuk at 145bp over Treasuries, pretty firmly between these two benchmarks, albeit slightly closer to Axiata than the sovereign. That was well inside the 170bp area pricing bankers initially approached investors with.

The deal came just eight days after the company announced it had set up a $2.5 billion multi-currency sukuk programme.

Some 137 investors placed orders worth $2 billion for the deal. Asian investors were allocated 77%, European investors 14% and Middle Eastern accounts 9%. Fund managers bought 46%, banks 22%, insurance companies and pension funds 26%, sovereign wealth funds 4% and private banks 2%.

The company last issued a bond in 2005, when it sold a $350 million 10-year bond that matured last May.

BNP Paribas, CIMB, Citi and HSBC were the joint bookrunners of the deal.

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