New Saudi tranches edge up from issue but remain below par; Sharjah, Damac price sukuk

By Rebecca Melvin

New York, April 11 – The Kingdom of Saudi Arabia’s newly priced notes edged up on Wednesday with the long-dated 2049 outperforming the two shorter tranches after the sovereign priced $11 billion of notes due 2025, 2030 and 2049. Sharjah Islamic Bank PJSC also priced $500 million of Islamic bonds at par for a profit rate of 4.231%, and the deal was seen flat to weaker at the end of the session for a close of 99.85 bid, 100.05, according to a London-based market source.

Spreads were mostly wider for Sharjah’s existing bonds.

Damac Real Estate Development Ltd. was another issuer that fixed final terms on Wednesday, also for a $500 million five-year Islamic bond that priced at par, but this one with a higher profit rate of 6 5/8%. It was not heard in secondary market action.

Neither Oman Telecommunications Co. SAOG, which was on the calendar and concluded roadshow meetings on Wednesday, nor the sovereign Qatar were seen to have priced expected deals in what was otherwise a jittery session.

Spreads were mostly wider in the Middle East and Africa region although Saudi Arabia’s existing sovereign bonds held in well. Egypt, Lebanon, Oman and Qatar were wider however, and Lebanon’s short-dated paper was significantly wider. Lebanon’s 6% notes due 2019 were wider by 25 basis points, according to a London-based source.

Saudi Arabia’s $4.5 billion of new 4% notes due April 2025 were seen 99.80 bid, 99.85 offered at the end of the session on Wednesday, which was a slightly tighter range from earlier in the day, when those notes were seen 99¾ bid, 99.85 offered, or up about ¾ point from a reoffered price of 99.073.

The $3 billion of Saudi 4½%% 2030 notes were seen at 99.65 bid, 99.80 offered compared to its reoffered 99.432; the $3.5 billion of Saudi 5% notes due 2049, which were the best performers of the three tranches, closed at 99.40 bid, 99.55 offered, a bit better from a mid-session quote of 99¼ bid, 99.45 offered, and more than a point better from the reoffered price of 97.829.

Meanwhile the market was weighed down by weaker Russia debt on the back of U.S. sanctions, and a possible U.S. military strike against Syria, with U.S. President Donald Trump’s angry tweets warning Russia of imminent military action, casting a pall over markets.

Meanwhile, release of the minutes from the Federal Open Market Committee meeting, which revealed officials are focused on potentially higher inflation, weighed on U.S. Treasury yields as investors anticipate a potentially faster pace of interest-rate increases.

© 2015 Prospect News.
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