Sabic, Albania announce new deals; UAE’s Aldar prices $500 million sukuk; Argentina quiet

By Rebecca Melvin

New York, Sept. 24 – The Middle East & Africa region continued to dominate the emerging markets primary market on Monday with a new mandate from Saudi Arabia’s Saudi Basic Industries Corp. (Sabic) and pricing emerging on a deal from United Arab Emirates’ Aldar Investment Properties PJSC for a $500 million seven-year sukuk.

But away from MENA, the Republic of Albania also joined the calendar with a planned euro-denominated offering of notes with an intermediate tenor.

Sabic’s planned dual-tranche offering of notes will be on a roadshow from Wednesday, with proceeds of a resulting deal earmarked to refinance its $1 billion five-year note, which matures on Oct. 3, and for general corporate purposes.

The Rule 144A and Regulation S deal for the Saudi chemicals, fertilizers, plastics and metals maker follows on the heels of a $2 billion sukuk in two tranches for Saudi Electricity Co., which priced on Thursday. The market eyed the differing format for the two Saudi deals. But primary focus was on the Aldar paper, which has been on the primary calendar since Aug. 31.

The new Aldar $500 million seven-year sukuk snuck in on Monday ahead of the Federal Reserve’s monetary policy meeting slated to start on Tuesday, with a press conference and anticipated rate hike in the cards for Wednesday.

The Abu Dhabi-based real estate company priced the $500 million seven-year sukuk with a 4¾% distribution rate, a reoffer at 99.718 and yield spread of mid-swaps plus 170 basis points, which was tight compared to guidance of mid-swaps plus 175 bps to 180 bps.

In secondary market trading, the $2.25 billion of South Africa’s Sasol Ltd. notes, which debuted in the market on Friday, continued to trade actively after the mining, energy and chemical company’s priced $2.25 billion of notes in two tranches last Thursday.

The $1.5 billion Sasol 5½-year tranche remained around 101 on Monday, according to Trace data. The new paper had risen to 100¾ bid, 101 offered on Friday, up from the issue priced at 99.852 on Thursday.

Elsewhere, the market was quiet ahead of the Fed meeting. News headlines for both Argentina and Turkey did not appear to move the needle on debt as the broader markets saw weaker U.S. stocks and U.S. Treasuries.

But Turkey’s lira improved more than 3% on Monday to 6.0575 against the U.S. dollar, compared to 6.29 to the dollar on Friday after U.S. Secretary of State Mike Pompeo said he expects discussions with Turkish officials this week to improve prospects for the release of U.S. Pastor Andrew Brunson, who is being held in Turkey on charges of terrorism. The Trump administration has fought for Brunson’s release, claiming the charges are bogus, and the president has imposed tariffs against Turkey.

The lira has dropped 40% against the dollar this year amid concerns that Turkish President Tayyip Erdogan exerts too much control over monetary policy and because of uncertainty stoked by the diplomatic row with the United States over Brunson.

Turkey’s 6 1/8% notes due 2028 were seen at 89.602 on Monday, which was lower by about seven cents on the day.

Argentina, which is the other major emerging markets economy under severe pressure, has withstood a 50% plunge in its currency for the year so far. Market players have anticipated more help from the International Monetary Fund to help the economy, which has seen a contraction and a run on the peso currency. A drought that has hurt Argentina’s grain exports has also raised concern. On Aug. 30, the currency moved to as high as 39.5 against the dollar, forcing the central bank to raise interest rates by 15% to 60%, the world’s highest rate.

On Monday, Argentine President Mauricio Macro said that the country is close to an IMF deal and that there is “zero chance” Argentina would default on its debts next year.

The IMF has already agreed to a $50 billion credit line for Argentina and according to reports the country needs $3 billion to $5 million of additional IMF credit.

On Monday the Argentine peso improved 0.13% to 37.33 to the dollar. Argentina’s 7 1/8% notes due 2117, known as the century bond, was unchanged in trade at 75.

© 2015 Prospect News.
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