Markets drift down with U.S. politics; Slovenia prices taps; QIB prices benchmark sukuk

By Colin Hanner

Chicago, May 17 – Wednesday brought on a continuous stream of new issues in emerging markets, though in terms of activity, markets drifted downward with the shaky ground under the U.S. political landscape.

Financial markets were embattled by headlines surrounding President Trump, in particular those regarding a memo that surfaced describing the president asking former FBI director James Comey to drop an investigation into Michael Flynn, the former National Security Advisor.

“Things are off today [in emerging markets], but everything is off today,” a market source said when asked about the secondary market. “Today’s definitely more of a risk-off day.”

With whispers of possible obstructions of justice, and even potential impeachment, policies associated with the president – most pertinently, fiscal policy – threw markets into a roil, with currencies and the U.S. Treasury yield reaching recent lows. Emerging markets assets followed.

Although the new deal space seems to be picking up, a market source said that away from larger companies that have issued in recent months and have reported earnings – and therefore able to have updated financials to gain investor support to issue new bonds – “most companies are still in the middle of getting financials out,” a market source said.

Slovenia prices second round

Slovenia priced €2 billion of taps of its notes due March 22, 2027 and Nov. 3, 2040, according to a market source.

The €1 billion 1¼% notes due 2027 priced at 98.014 to yield Bunds plus 103.5 basis points. The original €1 billion 1¼% notes due 2027 priced at mid-swaps plus 63 bps, following talk in the 65 bps area, in January.

In March, Slovenia tapped €800 million 1¼% notes due 2027 priced at 97.01 to yield Bunds plus 129 bps.

The €1 billion 1¾% notes due 2040 priced at 86.888 to yield Bunds plus 143.7 bps. The original €1 billion issue of notes due in November 2040 priced at 97.829 to yield mid-swaps plus 90 bps in October 2016.

In March, Slovenia tapped €500 million 1¾% notes due 2040 priced at 86.901 to yield Bunds plus 158.2 bps.

Qatar Islamic prices sukuk

Doha-based financial services company, Qatar Islamic Bank SAQ, sold $750 million 3.251% sukuk at par, a market source said.

Standard Chartered Bank, HSBC, Emirates, QInvest and Citigroup were joint bookrunners for the deal.

The bank’s last issue was in 2015, when it priced $750 million five-year Islamic bonds at par to yield 2.754%.

Sun Hung Kai sells benchmark

Sun Hung Kai Properties Ltd. priced $500 million 4.45% perpetual notes at par on Tuesday, a market source said.

The notes (A1) will be issued by Sun Hung Kai Properties (Capital Market) Ltd.

Citigroup, Standard Chartered and HSBC were the bookrunners for the deal.

Sun Hung Kai is a Hong Kong-based financial and securities holding company.

Pipeline whispers

Two countries are expected to price some new issues in the near future.

Lithuania plans to offer euro-denominated notes due 2027 and 2037, a market source said Wednesday.

BNP Paribas and JPMorgan are stabilizing managers for the deal.

Oman is expected to sell $2 billion of sukuk in the coming weeks, a market source said, citing comments made by Oman finance minister Darwish Al Balushi in a media report.

On Friday, S&P Global Ratings lowered its long- and short-term ratings on Oman to BB+/B from BBB-/A-3, citing the Omani government’s heightened external financing needs.

In March, Oman priced a combined $5 billion of notes due in five, 10 and 30 years, according to Prospect News.

© 2015 Prospect News.
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