In the face of volatile markets and potential US sanctions, Syngenta Group raised $500m from a 3.5-year Reg S bond offering. Syngenta Group is a Chinese-owned seeds and pesticides maker with a rating of Baa1/BBB+/A. The issuer was an acquisition of China National Chemical Corp in 2017. The company was the only Asian issuer to delve in the US dollar market. The deal is following the news that the US Defense Department had added ChemChina. This is going to be in the annual Communist Chinese Military Companies list in the tranche two category. It reflects that it is not subject to US sanctions currently but might have in the future. Furthermore, international investors have high concerns about the company’s roadshow with its potential effect of the US.
However, the issuer and its leads ruled out any impact, leading the CCMC list will not be included in Syngenta. A banker on the deal argued that after the clarification, investors knew that there were no sanctions against ChemChina. Plus, the issue was also not specific to Syngenta. However, analysts remain concerned about the bad impact on the future. Nomura credit analysts argued that they do not rule out the likelihood of further trade frictions. The update on the military sanction list also has a negative impact on Syngenta’s company profile or its bond holding structure.
Nomura credit analysts have found the initial guidance on the unattractive deal before the price tightens. The firm targeted an issue size of $500m from the start. The price of the bonds at Treasuries plus 80bp is tighter than initial guidance of 125bp. The data’ final distribution was not disclosed but some of the final price guidance was from the lead managers.