Naspers Ltd. (NPN), Africa’s largest media company, sold $750 million of seven-year debt in the region’s first overseas corporate bond sale in two months as it seeks funds to pay for acquisitions in emerging markets.
The senior unsecured notes were sold to yield 6 percent, or 4.02 percentage points more than similar maturity U.S. Treasuries, according to data compiled by Bloomberg. It was the company’s first offering abroad since it raised $700 million in 2010 with a sale of seven-year bonds that yielded 6.375 percent, or 4 percentage points more than Treasuries.
African companies had been shut out of international capital markets since May 2 as speculation the Federal Reserve will reduce U.S. stimulus fueled record outflows from emerging market bond funds. Average yields on corporate debt in the region surged 1.62 percentage points over the span, more than twice the jump in company borrowing costs globally, JPMorgan Chase & Co. and Bank of America Corp. index data show.
The offering was priced “aggressively cheap,” Michael Roche, an emerging-market fixed-income strategist at broker-dealer Seaport Group LLC, said in a telephone interview from New York. “This is the first deal by an infrequent corporate borrower since the market has tentatively reopened. It came disproportionately cheaper to its existing and sector credit spreads to ensure its placement.”
Naspers plans to use proceeds from the bond sale for “future acquisitions and the repayment of existing credit facilities,” according to a July 2 regulatory filing.
Investors pulled a record $23.3 billion from global bond funds in the week ending June 26, with outflows from emerging markets jumping to an all-time high, according to EPFR Global, a Cambridge, Massachusetts-based firm that tracks fund flows.
Naspers, based in Cape Town, is expanding its Internet business through acquisitions to take advantage of faster-growing emerging markets. The company plans to add to a portfolio of overseas assets that includes a 34 percent stake in Tencent Holdings Ltd. (700), China’s biggest Internet company, and 29 percent of Russian social-media and gaming provider Mail.ru Group Ltd. (MAIL)
Naspers was one of three investors in a $200 million funding round for Flipkart Online Services Ltd., the Indian online retailer said July 10.
The stock rose 1.6 percent to 770 rand yesterday in Johannesburg. Naspers has advanced 42 percent this year, the best performer after Mondi Group in the FTSE/JSE Africa Top40 (TOP40) index of South Africa’s largest companies, which has increased 3.7 percent.
Moody’s Investors Service rates Naspers Baa3, the lowest investment grade. The South African company had cash and cash equivalents of 15.8 billion rand for the year ending March compared with 9.8 billion rand a year earlier.