It is Axiata’s first landmark issuance of US$1.5 billion in size from the international capital markets, the all-time lowest coupon rate ever achieved by an Asian corporate, and, globally, represented the third lowest 30-year coupon rate for an Asian telecommunications issuer.
The dual-tranche offering marked Axiata’s first return to the international US dollar debt capital markets since 2016, comprising a 10-year $500.0 million Sukuk and a 30-year $1 billion conventional Notes.
The notes will be issued via Axiata’s wholly-owned special purpose vehicles, Axiata SPV2 Berhad and Axiata SPV5, respectively, as part of the firm’s “proactive management” of its balance sheet and debts as it looks to optimise its capital structure to reflect “the long-term nature of the telecommunications business”.
Axiata’s president and group CEO, Tan Sri Jamaludin Ibrahim, said: “The issuances will enhance the Group’s capital position greatly, while breaking new grounds in the financing market locally and within the region.
“In addition to demonstrating Axiata’s ability to access the debt capital markets, this successful conclusion further affirms international investors’ confidence in the long-term fundamentals and resilience of the Malaysian economy and its ability to swiftly scale towards recovery in the aftermath of COVID-19 triggered challenges,” he added.
Employing both Islamic Sukuk and conventional Notes to appeal to “the broadest possible investor base”, The issuances have been assigned expected ratings of Baa2(s) and BBB+(s) by Moody’s Investors Service Inc. and Standard & Poor’s Ratings Services, respectively.
Structured based on the Shari'a principle of Wakala, the firm said the Sukuk will be listed, but not quoted for trading, on Bursa Malaysia Securities Berhad (under the Exempt Regime) and will be listed and quoted on the Singapore Exchange Securities Trading Limited (“SGX-ST”). The Notes will be listed and quoted on the SGX-ST.
Axiata’s deputy group CEO, Dato’ Izzaddin Idris said: “We are very encouraged by the strong support evidenced by the oversubscription of the issuances which peaked at nearly 12 times across the two tranches as well as the tightening of the credit spread by 52 and 50 basis points respectively for the Sukuk and Notes, from our initial price guidance.
It’s a little over a year since Axiata Group Berhad entered into talks with Telenor Group about potentially merging their operations in Asia.
Idris continued: “Despite having gone to market under the ‘new normal’ circumstances, Axiata was able to successfully capitalise on the historical low interest rate environment to achieve our objectives of optimising our debt maturity profiles and reducing our financing costs which will translate to better preservation of liquidity for the group.”
