Cnooc Raises $4 Billion in Biggest Asian Dollar Bond Since 2003

Cnooc Ltd., China’s largest offshore energy explorer, sold $4 billion of bonds in the biggest dollar-denominated offering from Asia outside of Japan in more than nine years.

Investors bid for about $23.8 billion of notes, with asset managers making up the biggest buyer group for all four tenors, a person familiar with the matter said, asking not to be identified because the details are private. U.S. investors took 79 percent of the 10-year issue, the person said.

Aggregate proceeds from the four-part sale will be about $3.94 billion after commissions and fees, according to Cnooc estimates in a stock exchange filing dated today. A phone message left at Cnooc’s Beijing office seeking comment on the sale and e-mailed questions were not immediately returned.

The oil and natural gas explorer’s offering is the largest in the U.S. currency in Asia outside Japan since a $5 billion sale from Hutchison Whampoa Ltd. in November 2003, Bloomberg data show. Global investors attracted by the state backing and strategic significance of China’s oil and gas companies supported a record $6.9 billion of dollar bonds from the industry last month. The premium Cnooc paid on the 10-year notes was 35 basis points less than on similar-maturity securities it issued last year, the data show.

Issue Details

The company issued $2 billion of 3 percent bonds due 2023 to yield 155 basis points more than similar-maturity Treasuries and $500 million of 4.25 percent securities due in three decades with a 150 basis-point spread, according to data compiled by Bloomberg. The sale also included equal $750 million portions of 1.125 percent debt due 2016 that pays 95 basis points more than benchmarks and 1.75 percent, five-year notes with an extra yield of 120.

The company will use the funds to partly repay a $6 billion short-term bridge loan the Beijing-based company used to buy Canadian energy producer Nexen Inc., it said in a separate filing this week. The $15.1 billion deal was the biggest overseas takeover by a Chinese company.

Cnooc last sold debt in the U.S. currency in April last year, offering notes due May 2022 at a spread of 190 basis points over Treasuries, Bloomberg-compiled data show. It also sold securities due May 2042 that yielded 190 basis points more than comparable U.S. government bonds, according to the data.

Cnooc’s sale comes after Petroliam Nasional Bhd. raised $4.5 billion in August 2009 in a combined bond and sukuk security offering.

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