Azerbaijan’s Southern Gas Corridor CJSC has set initial price guidance in the 5.875 percent area for a tap of its existing $1 billion bond, according to one of the banks leading the transaction.
Citi, J.P. Morgan and UniCredit are the joint lead managers. In March 2016, Southern Gas Corridor Company printed its $1 billion worth 10-year bond, 80 basis points back of the sovereign curve, benefiting from an explicit state guarantee.
Initial price thoughts for the 10 year bond were released at 7 percent yield area, but leads UniCredit, Citi and JP Morgan were unable to move pricing tighter before pricing in line with that level later in the day.
The bond was sold at 99.112 with a coupon of 6.875 percent. Demand was largely driven by investors in the UK and US. The Southern Gas Corridor is one of the priority energy projects for the EU. It envisages the transportation of gas from the Caspian region to the European countries through Georgia and Turkey.
At the initial stage, the gas to be produced as part of the Stage 2 of development of Azerbaijan’s Shah Deniz field is considered as the main source for the Southern Gas Corridor projects. Other sources can also connect to this project at a later stage.
As part of the Stage 2 of the Shah Deniz development, the gas will be exported to Turkey and European markets by expanding the South Caucasus Pipeline and the construction of Trans Anatolian Natural Gas Pipeline and Trans Adriatic Pipeline.