Morning Commentary: Dar Al-Arkan taps market; Africa Finance sets price talk; Sinopec widens

By Colin Hanner

Chicago, April 6 – New and recent deals continued to buzz in emerging markets on Thursday morning, with Dar Al-Arkan Real Estate Development Co. selling $500 million of Islamic bonds.

Dar Al-Arkan sold the five-year bonds with a 6 7/8% coupon, the company said.

A market source said the issuance received significant interest from the market, with the order book closing close to $1.05 billion.

Alkhair Capital, Deutsche Bank, Dubai Islamic Bank, Emirates NBD Capital, Goldman Sachs International, Noor Bank and QInvest were the joint bookrunners of the deal.

The issuer is a Saudi Arabia-based property developer.

Saudi sovereigns

Saudi Arabia’s 2 3/8% notes due 2021 were quoted with a 98.06 bid, 98.24 offer, about ½ point lower over the past two sessions.

Seeing similar losses over the same period were its 3¼% notes due 2026, which were quoted with a 97.20 bid, 97.35 offer.

Africa Finance sets talk

A market source said Nigeria’s Africa Finance Corp., which had been winding up a roadshow on Wednesday, said initial price talk was in the 4 3/8% area for its dollar-denominated seven-year notes.

The source said books for the Lagos-based infrastructure-financing entity are in excess of $1 billion.

Sinopec widens

“[It was a] weak morning, but despite the market moving 2-3 basis points wider, things still feel generally resilient,” a market source said.

“Flows in the new Sinopec deal” – a benchmark offering of dollar-denominated notes in three tranches – “have been muted with all tranches opening wider on initial selling before finding some support and then fading again into lunch,” a market source said.

The deal includes three-year notes talked at Treasuries plus 120 bps, five-year notes talked at Treasuries plus 130 bps and 10-year notes talked at Treasuries plus 150 bps, a market source said.

All of the notes were trading 5 bps wider, “although seeing more buying interest in the [three-year notes] than the others,” a market source said.

Colombia, Mexico ‘quiet’

A market source characterized Mexican and Colombian markets as “very quiet.”

Columbia’s 4 3/8% notes due 2021 were quoted at 106 bid, 106½ offer.

And its 4% notes due 2024 were quoted at 102.95 bid, 103.45 offer.

In Mexico, “dealers appeared to be on the short side” despite it being quiet, a market source said.

The sovereign’s 5 1/8% notes due 2020 were quoted with a 108.15 bid, 108.55 offer. And its 4% notes due 2023 were quoted with a 103.10 bid, 103.50 offer.

Both sets of notes are nearly unchanged on the week.

Paul A. Harris contributed to this review

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