Middle East spreads widen, but deals emerge; Nigeria’s Seplat to bring smaller deal

By Rebecca Melvin

New York, March 12 – Despite generally wider spreads, new deals emerged in the Middle East region, and a smattering of activity occurred across other regions on Monday as U.S. Treasuries recouped some of their losses sustained on Friday on the heels of the U.S.’s stronger-than-expected February jobs report.

Middle East spreads were marginally wider across the board, including for Majid Al-Futtaim Holding LLC, the Dubai-based real estate developer that announced a proposed new dollar benchmark of perpetual hybrid notes and tender of an older issue of the same.

The new notes received BB+ ratings from both S&P Global Ratings and Fitch Ratings.

A notable exception to generally wider spreads was Majid’s existing $500 million 7 1/8% hybrid notes that are being tendered. Those notes were seen more than 60 basis points tighter, according to a London-based market source.

Turkey’s Yapi ve Kredi Bankasi AS bank launched $500 million of five-year bonds on Monday despite a ratings downgrade by Moody Investors Service on a raft of Turkish banks. The rating agency’s action followed on the heels of its downgrade of the Republic of Turkey two days earlier.

Moody’s said its action was driven by the government’s weakened position from which to support the lenders. Both the government debt and the lenders were downgraded to Ba3 with stable outlook from Ba1 with negative outlook.

The planned Yapi Kredi notes were launched to yield 6.1%, which was tightened from the 6¼% area.

Elsewhere in the region, Qatar-based lender Ahlibank saw its 3 5/8% notes due 2021 wider by about 2.2 bps on the day after the spread on the notes had tightened nearly 15 bps last week. The Ahlibank notes were indicated at 98.68 bid, 99.43 offered, while the Ahlibank 3½% notes due 2022 were indicated at 96.68 bid, 97.43 offered, which was wider by about 9.2 bps on the day.

An exception to the trend was Abu Dhabi’s 3 1/8% notes due 2026, which was about a basis point tighter on the day, with the bonds indicated at 96.15 bid, 96¼ offered.

Egypt offering eyed

The Arab Republic of Egypt named banks to manage its planned euro-denominated notes, which have been whispered at $3 billion to $4 billion in size. Deutsche Bank, BNP Paribas, Standard Chartered Bank and Alexbank were mandated to organize the deal, which has been in the pipeline since the middle of February when the sovereign priced $4 billion of dollar notes in five-, 10- and 30-year tranches.

In Africa, Nigeria’s Seplat Petroleum Development plc talked $300 million to $400 million of five-year notes, which was a smaller offering than the $500 million initially proposed. The deal was talked in the high 9% area.

The notes, which are non-callable for two years, represents the company’s first foray into the international debt market and the first cross-border bond for an African corporate issuer this year.

Seplat is a Nigerian oil and gas exploration and development company.

Growthpoint sells green bonds

Meanwhile, Growthpoint Properties Ltd. of South Africa priced ZAR 1.1 billion of green bonds in three tranches. The company sold ZAR 300 million of floating-rate notes due 2023 with a coupon of Jibar plus 139 bps, ZAR 240 million of floating-rate notes due 2025 with a coupon of Jibar plus 169 bps and ZAR 560 million of floating-rate notes due 2028 with a coupon of Jibar plus 200 bps.

Growthpoint properties is a Johannesburg-based real estate investor.

Venezuela’s bonds weaken

In Latin America, the Venezuela bond curve was about a point lower, a New York-based analyst said. That move was contrary to a 2-point lift on Friday, which occurred ahead of a downgrade for the sovereign on Friday by Moody’s to C.

The downgrade was motivated by expectations that Venezuela’s payment capacity will continue to erode, leading to heavy losses for bondholders, as ongoing defaults on interest payments on various bonds are compounded by upcoming principal maturities, the ratings agency said.

The analyst said that he wasn’t sure whether it was the downgrade that caused a weaker Venezuela curve.

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