Sinopec Launches 3-Part, $3 Billion Bond Deal

Asia's largest refiner by capacity, China Petrochemical Corp.--known as Sinopec Group--launched a $3 billion, three-tranche bond offering Thursday, extending a recent surge of international debt issuance from the region despite the euro-zone woes. The state-owned firm launched a five-year tranche to yield 205 basis points over comparable Treasurys, a 10-year tranche to yield 210 basis points over Treasurys, and a 30-year tranche to yield 185 basis points over Treasurys, according to someone familiar with the matter.

Each tranche is for $1 billion. Companies across Asia have been taking advantage of superlow rates to fund future spending needs, although the latest bout of euro-zone woes--the political stalemate in Greece, Spain nationalizing a major lender, and France's election of austerity critic Francois Hollande--has dampened enthusiasm somewhat. Dollar-denominated debt capital markets issuance out of Asia excluding Japan in the first four months of 2012 amounted to $56.4 billion, well above $39.5 billion in the same period last year, according to Dealogic data.

China's other two big state oil companies, China National Petroleum Corp. and Cnooc Ltd., both tapped the dollar-bond market in April, raising $1.15 billion and $2 billion respectively. Over recent months, Sinopec Group has completed deals to purchase a one-third stake in five of Devon Energy Corp.'s U.S. shale oil and gas fields for $2.44 billion, and a 30% stake in the Brazilian unit of Portuguese oil company Galp Energia SA for $5.16 billion.

China Petroleum & Chemical Corp. (SNP), or Sinopec Corp.--the listed unit of Sinopec Group--said last month its first-quarter net profit slipped 35% from a year earlier as refining losses outweighed higher oil prices and strong energy demand.

BOC International, Citigroup and HSBC are joint global coordinators of Sinopec's planned offering, and the same three banks along with Barclays, Goldman Sachs, JP Morgan, Mizuho Securities and UBS are joint lead managers and bookrunners on the Rule 144A/Reg S deal. The bond is provisionally rated Aa3 by Moody's Investors Service and single-A-plus by Standard & Poor's Ratings Services.

The company plans to use the proceeds for general corporate purposes of its overseas businesses and to fund overseas expansion, in particular oil and gas exploration, development, production and acquisition activities.( Foxbusiness.com, Edited by Topco)