Morning Commentary: Investors eye new Saudi Arabia, Ziraat Bank tranches; old Saudi notes widen

By Rebecca Melvin

New York, Sept. 25 – Middle Eastern bonds were in focus early Monday, with investors considering possible new dollar-denominated offerings by Saudi Arabia for five, 10 and 30 year tranches and Turkiye Cumhuriyeti Ziraat Bankasi AS guiding talk on a new dollar-denominated benchmark of six-year notes.

The initial order book for the Ziraat notes was for more than $1.4 billion and they were talked to yield 5¼% to 5 3/8%, which was tightened from initial talk of a 5 3/8% to 5½% yield.

Some Saudi existing notes widened. The near-dated Saudi 2 3/8% notes due 2021 were indicated at 98.83 bid, 98.95 offered, with the z-yield spread widening out 6.6 basis points, according to a market source.

The Saudi 2022 notes with a 2.894% coupon were at 100.18 bid, 100.43 offered with a yield spread that widened by only 1.5 bps.

The Saudi 2026 and 2027 notes were wider by 5.5 bps and 4.6 bps, respectively, and the Saudi 4½% notes due 2046 were at 100.87 bid, 101.37 offered, with a z-spread that was 6.2 bps wider.

The market was watching the start of voting in the Kurdish independence referendum that was going ahead despite warnings from Iraqi central government and neighboring Turkey.

“A ‘yes’ vote in favor or independence is highly likely although not binding, with the KRG president rather seeing it as a mandate to go into ‘very long’ separation talks with Baghdad,” MUFG strategist of CEEMEA credit Trieu Pham wrote in a note on Monday.

Turkey is strongly against the referendum with Turkey’s National Security Council and cabinet on Friday saying that the ballot is a direct threat to national security, and on Sunday the parliament extended its mandate for military operations in Iraq and Syria for another year. “That said, Turkey has not specified any measures against the KRG to this point,” Pham wrote.

Meanwhile in Germany, the fact that German chancellor Angela Merkel prevailed for a fourth term in the weekend election doesn’t mean that nothing has changed. Her ruling Christian Democrat-led coalition stumbled during weekend elections, allowing the first far-right party to enter the parliament for the first time in more than 50 years, according to reports.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.