Emerging Markets: Dubai, Sabic, Ahli Bank price benchmarks; Norilsk Nickel prints notes

By Rebecca Melvin

New York, Sept. 4 – The emerging markets primary market had a trio of issuers from the Middle East, as well as a Russian corporate issuer. But the rest of the Central and Emerging Europe region was quiet as was the Latin America region. Asian issuers, mostly from China, comprised the remainder of this past week’s issuance tally.

Dubai returned to the global bond market this past week for the first time since 2014. The sovereign’s Department of Finance issued $2 billion in two tranches, including a 10-year Islamic bond, or sukuk, and a 30-year conventional bond.

The $1 billion 10-year sukuk priced with a profit rate of 2.763%, and the $1 billion 30-year notes priced at an interest rate of 3.9%.

Dubai was joined by a corporate industrial company and a lender from the region in the week ahead of the U.S. Labor Day holiday, which typically marks an unofficial end to summer.

The other Middle East region issuers were Saudi Basic Industries Corp. (Sabic), which priced $1 billion of new 10-year notes and a new dual-listed Formosa tranche due in 30 years, and Ahli Bank QSC of Qatar, which sold $500 million of 1 7/8% notes due 2025.

Sabic priced a $500 million tranche of 2.15% notes due 2030 at 99.687 on Thursday for a yield of 2.185%, or a spread over mid-swaps of 155 basis points. It also priced a $500 million tranche of 3% notes due 2050 at par for a yield spread of mid-swaps plus 202 bps. The 30-year notes are being listed on the Euronext Dublin and Taipei exchanges, and the 10-year notes will be listed only on Euronext Dublin.

BNP Paribas, Citigroup and HSBC were global coordinators, joint bookrunners and joint lead managers of the Regulation S deal together with Mizuho Securities, MUFG and SMBC Nikko also acting as joint bookrunners on the 10-year transaction and as structuring agents on the Formosa bond.

Co-managers were BofA Securities, Credit Agricole CIB, ING and Standard Chartered Bank.

Sabic Capital I BV was issuer of the senior unsecured dual tranche deal.

Sabic is a Riyadh-based maker of chemicals, fertilizers, plastics and metals.

Ahli Bank sold $500 million of 1 7/8% notes due 2025 under its $2 billion euro medium-term note program. This was the fourth issuance under the program.

Barclays, Mizuho Financial Group, Qatar National Bank and Standard Chartered Bank were the joint lead managers and bookrunners.

The lender is based in Doha.

Also of note this past week was PJSC MMC Norilsk Nickel’s $500 million five-year loan participation notes. The Moscow-based mining and metallurgical company priced its deal at par to yield 2.55%, or mid-swaps plus 224.2 bps. Joint bookrunners of the Rule 144A and Regulation S notes were Citigroup Global Markets Inc., Societe Generale, UBS AG London Branch, BofA Securities, Gazprombank, Sberbank CIB, UniCredit Bank AG and VTB Capital.

MMC Finance DAC was the issuer of the notes.

Among issuers of China, ABC International Holdings Ltd. applied to list $800 million of 1.65% notes due 2025, according to a listing notice with the Stock Exchange of Hong Kong Ltd.

The notes are being issued by Inventive Global Investments Ltd. and guaranteed by the company under a $3.5 billion medium-term note program.

The listing was expected to take effect on Friday.

ABC International is owned by Agricultural Bank of China Ltd., a Beijing-based commercial bank with branches in mainland China, Hong Kong and Singapore.

Singapore-based lender Oversea-Chinese Banking Corp. Ltd. priced $1 billion of tier 2 subordinated notes due 2030 (expected: A2/BBB+/A) at par with an initial coupon of 1.832%, according to a company announcement.

The notes are callable on Sept. 10, 2025. If the notes are not redeemed at that time, the interest rate will reset to a fixed rate equal to Treasuries plus 158 bps.

OCBC Bank, Citigroup Global Markets Singapore Pte. Ltd., J.P. Morgan (SEA) Ltd. and Merrill Lynch (Singapore) Pte. Ltd. are the joint lead managers and joint bookrunners.

The notes will be issued under the bank’s $30 billion global medium-term note program.

Proceeds will be used for general corporate purposes.

Hong Kong-based investment management and holding company First Pacific Co. Ltd. priced $350 million of seven-year guaranteed bonds via FPC Resources Ltd. at par to yield 4 3/8% on Thursday, according to a company announcement.

Mizuho Securities Asia Ltd., UBS AG Singapore Branch and SMBC Nikko Capital Markets Ltd. were managers for the offering.

There is a make-whole call until Sept. 11, 2024, when the bonds become callable at 102.188 until 2025, then at 101.094 until 2026 and at par thereafter.

Holders will be able to put the bonds at 101 within 30 days of a change-of-control event.

The proceeds will be used for repaying and refinancing debt.

First Pacific has operations in consumer food products, infrastructure, natural resources and telecommunications.

Another Hong Kong-based investment company, Emperor International Holdings Ltd. priced $250 million 4½% notes due 2023 under its $2 billion medium term note program, according to a company announcement.

Joint bookrunners of the offering were Emperor Securities, AMTD, BEA, Guotai Junan International, HSBC, Haitong, Bank of Communications, BNP Paribas and BOC International.

Listing of the notes on the Stock Exchange of Hong Kong Ltd. was expected to become effective on Friday.

Fund flows deluged the emerging markets in the week ending Sept. 2, according to EPFR’s Global Navigator, an online weekly bulletin.

“Yield hungry investors who flocked to U.S. junk bonds in the immediate aftermath of March’s pandemic-driven sell off, steered over $3 billion into EPFR-tracked Emerging Markets Bond Funds going into September,” the data-tracker said.

It was the largest weekly inflow for the group since the middle of the first quarter of 2019 and extended their longest inflow streak since the second half of 2017.

“Attractive yields underpinned by stronger growth compared to most developed markets have prompted investors to look beyond the more troubled markets such as Turkey,” the Global Navigator stated.

The week ending Sept. 2 saw EPFR-tracked Bond Funds add another $22 billion to a year-to-date inflow total than now exceeds $175 billion. Of the week’s total, just under three-quarters went to U.S. Bond Funds, while Global Bond Funds took in fresh money for the 21st week in a row and Emerging Markets Bond Funds posted their biggest weekly inflow in more than 17 months. Europe and Asia Pacific Bond Funds also recorded modest inflows.

Funds with hard currency mandates accounted for the biggest share of the flows, with investors showing a preference for funds with investment-grade mandates and EM Sovereign Funds over corporates. At the country level China Bond Funds posted a second consecutive inflow record while South Africa Bond Funds posted a ninth straight inflow and Turkey Bond Funds had their sixth straight outflow.

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