Cnooc Sells $4 Billion of Bonds as Deutsche Tips Booms

Cnooc Ltd. (883) sold $4 billion of dollar bonds in three parts, joining companies from South Korea to the Philippines as Deutsche Bank AG forecasts an increase in U.S. currency note issuance from Asia.

China’s biggest offshore energy explorer issued $1.25 billion of three-year notes, $2.25 billion of 10-year bonds and $500 million of 30-year debt. Seoul-based Woori Bank Co. sold the country’s first Basel III-compliant bonds while Philippines developer Vista Land & Lifescapes Inc. (VLL) issued five-year securities, data compiled by Bloomberg show.

Investors can expect at least $10 billion of issuance from Asia outside Japan in the next two to three weeks, 66 percent more than in all of March, according to Harsh Agarwal, Deutsche Bank’s Singapore-based head of Asia credit research. Bond funds took in $2.07 billion in the six days ended April 15, according to data provider EPFR Global.

“We’re just coming off the Easter break and markets are generally strong,” Agarwal said in a telephone interview April 22. “Demand is very high. Investors have cash to put to work.” Deutsche Bank is the fourth-biggest arranger of dollar notes in Asia this year, with a 7.5 percent market share.

Cnooc sold the three-year debentures at a spread of 85 basis points more than similar-maturity Treasuries, the 10-year notes at 160 basis points and the 30-year bonds at 150 basis points. Investors in the U.S. bought 74 percent of the three-year securities, 60 percent of the 10-year bonds and 42 percent of the 30-year debentures, a person familiar with the matter said.

Cnooc, Tencent

The Beijing-based, state-owned company April 22 reported gains in first quarter output and sales as production rose at its Canadian unit Nexen. Cnooc is banking on its $15.1 billion Nexen acquisition, completed February 2013, and further spending to boost output to fulfill a government mandate of securing supplies to meet China’s burgeoning energy needs.

Cnooc last sold dollar bonds in September, when it raised $1.3 billion selling 4.5 percent notes due 2023, according to data compiled by Bloomberg.

Tencent Holdings Ltd. (700), Asia’s largest Internet company, raised $2.5 billion from a sale of three- and five-year bonds on April 22, according to data compiled by Bloomberg. Some 79 percent of the shorter tenor notes went to U.S. investors, another person familiar with the matter said.

Woori Bank issued $1 billion of 4.75 percent, subordinated bonds due 2024 at a spread of 207.5 basis points more than Treasuries, Bloomberg data show.

To contact the reporters on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net; Tanya Angerer in Singapore at tangerer@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net Andrew Monahan, John Parry

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