Dechert Advises on Trio of Significant Emerging Markets Bond Issuances and a Related Consent Solicitation

Dechert LLP Dubai-based corporate & securities partner Louise Roman recently led three Dechert teams advising clients on capital markets transactions in three emerging markets – Kazakhstan, Oman and Georgia.

Dechert advised JSC National Company KazMunayGas (“KMG”) on its consent solicitation seeking the approval of the holders of its Eurobonds in each series issued and outstanding under its US$10,500,000,000 Global Medium Term Note Programme (the “Programme”) to proposed amendments to the terms and conditions of such Eurobonds, which was successfully completed in early April and was followed, in May, by an update of the Programme and the issuance of US$2.75 billion of new Eurobonds thereunder. Upon the successful completion of the consent solicitation and the related amendment of the terms of KMG’s existing Eurobonds, the new Eurobonds were issued in three series, comprising (i) US$500,000,000 3.875% Notes due 2022 (Series 10); (ii) US$1,000,000,000 4.75% Notes due 2027 (Series 11); and (iii) US$1,250,000,000 5.75% Notes due 2047 (Series 12). KMG is the parent company of the vertically-integrated state-owned oil and gas group in Kazakhstan. The issuance of the new Eurobonds, which was met with significant demand from international investors, comprises the largest corporate issuance of Eurobonds from the CIS region since 2014. The issuance parameters set new yield benchmarks for KMG and other corporate issuers in Kazakhstan. The Eurobonds are listed on the London Stock Exchange and the Kazakhstan Stock Exchange. The successful consent solicitation is part of an ongoing project by KMG to harmonize the terms and conditions of its existing debt obligations and thereby gain flexibility to optimize the conduct of its operations to the betterment of all stakeholders.

Dechert’s capital markets team on these transactions was led by Roman, with support on the international side from London-based senior associate Jennifer Buckett and associate Amy Rees and on the local side from Kazakhstan-qualified partner Victor Mokrousov and associate Yevgeniya Nossova from the Firm’s Almaty office. Citigroup Global Markets Limited, Deutsche Bank AG, London Branch, UBS AG London Branch, JSC Halyk Finance and JSC “Skybridge Invest” acted as the joint lead managers for the new Eurobond issuance, while Deutsche Bank AG, London Branch, and UBS AG London Branch acted as the solicitation agents for the consent solicitation.

In addition, Dechert advised bank muscat SAOG and J.P Morgan Securities plc, as joint lead managers, in connection with the issuance by OmGrid Funding Limited of US$500 million 5.196% Notes due 2027 and guaranteed by Oman Electricity Transmission Company S.A.O.C, which closed in mid-May. This transaction follows on the 2015 debut issuance by Lamar Funding Limited of its US$1 billion 3.958% Notes due 2025 and guaranteed by Oman Electricity Transmission Company S.A.O.C., in which Dechert also advised bank muscat SAOG and J.P. Morgan Securities plc as joint lead managers. This transaction comprised the first bond issuance following the adoption of a new Omani withholding tax law, which presented structuring issues of first impression for the working group. In order to address the potentially costly ramifications to the guarantor of the new withholding tax law, the transaction features an innovative substitution clause, which will provide certain flexibility in the event that negotiations with the Omani tax authorities are not timely or successfully completed. The Notes are listed on the Irish Stock Exchange.

The Dechert team assisting Roman in advising bank muscat SAOG and J.P Morgan Securities plc in this novel transaction included associate Sam Bardon and law clerk Chelsea Fish in London. Dechert cooperated with Al Busaidy, Mansoor Jamal & Co. (Barristers & Legal Consultants), a leading firm in Oman, to provide the full complement of legal advice required by the joint lead managers on this transaction.

Finally, in June 2017, Dechert advised J.P. Morgan Securities plc and Renaissance Securities (Cyprus) Limited in connection with the issuance by the Joint Stock Company Bank of Georgia of GEL500 million 11.00% Notes due 2020 payable in U.S. dollars. This transaction, which completed at the beginning of June, comprises the first ever international capital markets issuance of debt securities denominated in Georgian Lari. The Notes are listed on the Irish Stock Exchange.

Roman was assisted on this transaction by senior associate Jennifer Buckett and associate Amy Rees in London, as well as Georgian-law qualified national partner Archil Giorgadze and associates Irakli Sokolovski, Ana Kostava and Ana Kochiashvili from Dechert’s Tbilisi office.

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