The first foreign bond issue is the Gazprom bond issue. It is an Eurobond; which was issued in the Russian Ruble currency. The issue date was 21st February 2011. The maturity date for this Gazprom bond is 12th February 2017. The coupon is 5.136% per annum (Williams 31). Price for the Gazprom bond is 1,000 Rubles. However, details on the yield for this bond are unavailable. The seniority for these bonds has been set above that of other bonds by this company. This applies to those bonds which are of a term less than the expiry date of 2014. Security details for this bond are unavailable. This bond has been rated by three companies. The first rating is by Standard and Poor’s, which are BBB/ stable. The rating by Moody’s rating is Baa1/ stable, whereas BBB/ stable are the rating by Fitch (Williams 33). Gazprom bond issue is the type of public offering. In this case, the book runners are Credit Suisse and UBS. In addition, ROS Bank is the co-lead manager. The purpose of this bond issue is to fund the exploration and production plans for this company. A growth of 12.7% in revenue has been targeted over the next three years (Williams 34). Therefore, it is crucial to fund such plans by a bond issue.
The second foreign bond issue is the Petrobras Bond Issue. The currency for this issue is the Brazilian Real. The issue date for this bond was 2nd February 2012 while the maturity date for the bond is 27th January 2021. The coupon is 5.375% (Korby and Jenkins). For this bond, price and yield details are unavailable. Seniority details for this bond had been set above the 5 year bonds issued in 2008. The security for these bonds is the gas stations situated across Brazil. Petrobras is a state owned enterprise and hence it has a well established footprint in Brazil (Korby and Jenkins). The rating by Standard and Poor’s for this bond is BBB/ stable. In addition, the rating by Moody is Baa1/ stable while the rating by Fitch is BBB/ stable. A public offering has been used for this bond. The investment banks that have been used in this case include JP Morgan, BTG Pactual, Citigroup, Santander, Morgan Stanley and HSBC Bank. Proceeds from this issue are to be channeled towards development of offshore oil fields. An equivalent of US $ 237 billion will be spent in this development over a period of five years (Korby and Jenkins).
BMW bond issue is the third foreign bond issue. The currency for this bond is the Euro. The issue date is 22nd January 2011 while the maturity date has been set at 22nd January 2017. The annual coupon for this bond is 4.25% while its price was set at 1,000 Euros (Williams 34). The seniority for the BMW bond has not been prioritized, except for the debt that is subordinate to bonds. This implies that holders of this bond do not stand a chance to be paid preferentially. Security for the BMW bond has not been specified since BMW has not allocated any of its assets as security for this bond. These bonds have been rated by Standard and Poor’s as A+ while Moody’s has rated them as A2. Fitch has rated the bonds as stable. The type of issue for the BMW bond is a public offering. The book runners for this issue comprised of Bank of America, UBS and Merrill Lynch (Williams 35). These proceeds are to be used in expansion of BMW’s car manufacturing business. Its acquisition of some manufacturing rights by some competitor firms is a key priority by BMW. The Rolls-Royce rights have been a key move for BMW and funding such expansion plans is a strategic decision by the automotive manufacturer.
The fourth foreign bond issue is the Telecom Italia bond issue. The foreign bond by this company was issued in the Euro currency. The date of issuance was 25th September 2013 while the maturity date was set at 25th September 2020. A coupon of 4.875% has been set for the Telecom Italia bond. This coupon is set an annual basis. The price for this bond is 1,000 Euros with a yield of 5.054%. In order to attract the required funds, the management of Telecom Italia has set this bond issue with seniority over other bonds issued by the company (Korby and Jenkins). The management felt that such a decision would be instrumental in attracting the highly required funds. However, there has not been any security allocation towards this bond. This is because the issuing company considers itself to be well funded and investors rate it highly. As far as rating is concerned, Standard and Poor’s has rated the bond as BBB. Moody’s has rated this bond as Baa3 while Fitch has rated the Telecom Italia bond as BBB. The type of issue for this bond is a public offering. Book runners for this public issue are several. They include BBVA, Uni-credit, RBS, Mitsubishi, Deutsche Bank, Santander and SMBC. Telecom Italia has issued this bond to refinance maturing debt. The company wishes to reduce its leverage substantially in the next seven years. This step has been taken in the wake of creeping debt capital costs (Korby and Jenkins).
Samsung Electronics Bond issue is the final bond issue. This foreign bond was issued in the Korean won currency. Its issue date was 10th April 2012 while the maturity date has been slated for 10th April 2017. Samsung Electronics has set the coupon frequency at twice per year at a rate of 1.75% (Williams 35). It has a price of 1500 Korean won. However, its yield details are unavailable. Seniority for this bond is inapplicable since the company has no other bonds. This is because the previous bond was issued in 1998 and it has already matured. Therefore, there is no chance of seniority in this case. Security for the Samsung bond is based on the firm’s manufacturing equipment. Since the company manufactures electronics by use of equipment; its fixed assets levels are sufficient to act as security for this bond. The rating for the bond is positive since Standard and poor’s has rated the bond as an A while Moody’s has rated the Samsung bond as an A1. Fitch rated the bond as stable. The Samsung bond issue is a public offering. The book runners for this bond issue were Merrill Lynch, Goldman Sachs, JP Morgan, Bank of America and Citigroup (Korby and Jenkins). These funds will be applied in expanding its smart phones manufacturing business in order to compete effectively against Apple Incorporation. Despite the fact that Samsung is a general electronics manufacturer, the smart phones business is lucrative and hence this firm wishes to position itself strategically.
Korby, Boris and Christine Jenkins. "International Bond Issues: Petrobras and Samsung Bond Issues." Bloomberg News (2012): 2-4.
Williams, Terry. International bonds: Gazprom and BMW. 15 July 2012. 31-35 December 2013.