In Kazhaksthan, Tengizchevroil (TCO) is issuing two tranches of Baa2-rated Eurobonds totaling $125 billion at 5 and 10 years maturities. The 5Y bonds for $500 million at 2.75% and 10Y for $750 million at 3.375%. The affirmation of the rating indicates that although an increase in debt will alter TCO’s credit profile, the company can take on more credit risk as operating performance remains strong, despite concers over the pandemic.
TCO is currently developing the Tengiz and Korolevskoye oil and gas fields in the Atyrau region of Kazakhstan. In 2019, the company increased its oil production by 4.2% compared to 2018 – to 29.8 million tons, which accounts for 38% of all Kazakh oil production. The ownership of TCO is primarily held by Chevron (50%), ExxonMobil Kazakhstan Ventures Inc (25%), and Kazakh KazMunayGas (20%).
Worldwide interest rates are approaching their lowest point in the past 10 years. With the abundance of cheap cash available, taking a loan to invest in the credit markets of emerging countries is gaining some real traction. The forthcoming Eurobond issue of TCO presents an investment opportunity to generate stable returns with moderate risk ( definitely less risky than Argentine sovereign debt or going for a walk without a mask on).