Al Hilal prices new issue, Sabic notes weaken; U.S. government shutdown has little effect

By Aleesia Forni

Virginia Beach, Oct. 1 - Abu Dhabi-based Al Hilal Bank brought a new deal to the primary market on Tuesday, as the U.S. government shutdown seemed to have little effect on the overall market.

"I guess having been down this road before, people are much less inclined to react massively one way or the other," a trader said.

The primary market saw Al Hilal Bank price a $500 million issue of notes due 2018 on Tuesday.

The 3.267% issue sold with a spread of mid-swaps plus 170 basis points, 20 bps tighter than price guidance.

A trader quoted the notes about 15 bps better at 155 bps bid on Tuesday.

In other secondary market action, Saudi Arabia's Saudi Basic Industries Corp. (Sabic) saw its recently priced $1 billion of 2 5/8% five-year notes trade slightly wider on the day.

Elsewhere, Asian markets were mostly unchanged as many players were away during the session due to China's National Day.

In other market news, OGX Petroleo e Gas Participacoes SA failed to make a coupon payment on its 2022 maturity on Tuesday. The non-payment was expected however, and the company's 2018 paper actually ended slightly firmer.

Al Hilal prices tight

Tuesday saw Abu Dhabi's Al Hilal Bank price $500 million of 3.267% notes (A1//) due 2018 at par with a spread of mid-swaps plus 170 bps, according to a market source.

The deal priced tight of guidance, which was set in the mid-swaps plus 190 bps area.

HSBC, Standard Chartered Bank, Citigroup and National Bank of Abu Dhabi were the bookrunners for the Regulation S offering of Islamic bonds.

The lender is owned by the Abu Dhabi government.

Sabic bonds widen

A London-based market source saw the recently priced deal from Sabic trading wider on the day, adding that the notes had been active throughout the session.

The notes were quoted at 99 1/8 on Tuesday, before closed the London session at 99¼ bid, 99 3/8 offered.

The company priced the $1 billion 2 5/8% five-year notes on Thursday.

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

OGX skips interest payment

OGX's 8½% notes due 2018 firmed during the session, even though the company missed a $44.5 million coupon on its 2022 maturity.

A trader saw the bonds quoted at 16½ bid, 17 offered, while another trader placed the issue around the 16 mark.

The first trader noted that there were sellers of the bonds in the marketplace.

The non-payment was largely expected by the market. The company said it wanted to preserve its cash to use for the development of its Tubarao Martelo oil field, its only producing field.

As is typical, the Brazilian oil company has 30 days to make the payment or find itself in default.

As was previously reported, it is widely believed that the company, which is working with Blackstone Group LP and Lazard to look at its restructuring options, will file for bankruptcy before the 30-day deadline expires.

On the news, Standard & Poor's lowered OGX's rating to D from CCC-.

OGX's skipped payment comes on the heels of Mexican homebuilder Desarrolladora Homex, SAB de CV missing payments on its 7½% notes due 2015 and 9¾% notes due 2020.

The payment on the 7½% notes came due on Monday and on the 9¾% notes on Wednesday.

Despite the missed payments, a trader said he saw no quotes for Homex paper during Tuesday trading. On Monday, he said, the 9¾% notes were quoted in a 24 to 26 context, while the 7½% notes were around 23½ to 251/2.

Stephanie N. Rotondo contributed to this review.

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