Dubai Islamic Bank prints notes; Vale, Turkey see action in secondary; Equate preps deal

By Christine Van Dusen

Atlanta, Feb. 7 – Dubai Islamic Bank PJSC sold notes on a Tuesday that saw some activity in the secondary market for Brazil-based Vale SA and bonds from Turkey.

The new issue of notes from Vale – a $1 billion add-on to its 6¼% notes due 2026 – traded at 107¾ bid, 108¼ after pricing Monday at 107.793.

The notes came to the market at a yield of 5.2%, or Treasuries plus 278.3 basis points, via bookrunners BB Securities, Bradesco BBI, JPMorgan, MUFG and Santander in a Securities and Exchange Commission-registered deal. Mizuho and SMBC Nikko were co-managers.

The proceeds will be used to refinance the company’s 4 3/8% euro-denominated notes due 2018 and for general corporate purposes.

Bonds from Turkey were between 7 bps and 8 bps wider on Tuesday morning, a trader said.

“Few long-end bids are creeping in as shorts cover and buyers of risk look to pick up risk at steeper levels,” he said. “The 2043 is underperforming on the curve as index money sells. Front-end bonds are also off the tights, with real-money trimming at the tights. The 2022s remain bid from locals.”

Banks and corporates from Turkey saw better two-way activity, widening by only 3 bps to 4 bps, he said.

In its new deal, Dubai Islamic Bank priced $1 billion 3.664% notes due Feb. 14, 2022 at par to yield 3.664%, or mid-swaps plus 170 bps, a syndicate source said.

The notes priced tighter than talk, set initially in the 185 bps area.

DIB deal in focus

Bank ABC, Boubyan Bank, Emirates NBD, HSBC, Maybank, National Bank of Abu Dhabi, Sharjah Islamic Bank and Standard Chartered were the bookrunners for DIB’s Regulation S deal.

“The Islamic bank has a $500 million maturity in May and last tapped international markets almost a year ago for a five-year $500 million transaction at mid-swaps plus 230 bps,” a trader said. “Among the [Gulf region] and [United Arab Emirates] banks, we consider the DIB curve as attractive.”

Though asset quality and loan concentration are “still weaknesses, we have seen continuous improvements over the last few years,” he said, pointing to the bank’s better nonperforming loan ratio and loan loss coverage.

“The improvement in asset quality was also key for Moody’s outlook revision to positive in November,” he said.

Equate sets size, tenor

In other deal-related news, Kuwait’s Equate Petrochemical Co. KSCC set the size at $750 million and the tenor at seven years for its upcoming issue of Islamic bonds, a market source said.

Citigroup, HSBC, JPMorgan, KFH Capital and NBK are the global coordinators and – with Mizuho, MUFG, National Bank of Abu Dhabi and SMBC Nikko – joint bookrunners for the deal.

In October the issuer priced $2.25 billion of senior notes in two tranches, with $1 billion 3% notes due 2022 pricing at a 195 bps over mid-swaps. A $1.25 billion tranche of 4¼% notes due 2026 priced at mid-swaps plus 270 bps.

The 2022 notes traded Tuesday at 96.62 bid, 97.12 offered, while the 2026s were spotted at 98.62 bid, 99.12 offered.

Equate is 85% owned by Petrochemical Industries Co. and Dow Chemical and produces essential chemical compounds as the largest petrochemical complex in Kuwait.

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