Middle Eastern banks print notes during wildly volatile session; Dar Al-Arkan performs

By Christine Van Dusen

Atlanta, May 22 - Abu Dhabi Commercial Bank PJSC and Dubai's Emirates NBD sold notes on a Wednesday made unstable by news that Federal Reserve policymakers favor cutting stimulus programs as soon as next month if the economy continues to strengthen.

"Wild swings on rates this afternoon saw the market very volatile. May isn't letting anyone down for volatility," a London-based trader said. "We saw bids firm up and some offers lifted. Perpetuals were bid and the long end moved higher. Plenty got wrong-footed as the 10-year dropped like a stone to 2%."

It was against this backdrop that the two Middle Eastern issuers priced new bonds, with Abu Dhabi's ADCB selling $7.5 billion 3 1/8% notes due 2023 at 99.757 to yield mid-swaps plus 220 basis points via Standard Chartered Bank as the bookrunner for the deal.

Dubai's Emirates NBD sold $1 billion 5¾% perpetual notes at par to yield 5¾% with BofA Merrill Lynch, Deutsche Bank, Emirates NBD, HSBC, ING and Morgan Stanley in a Regulation S deal.

"Not the best afternoon for Emirates NBD and ADCB to issue non-senior bonds," the London trader said. "Both are very well-offered and feel pretty poorly placed, closing nicely below reoffer."

Following the pricing of the deal, Emirates NBD's new notes traded at 99 bid, 99½ offered.

On the other end of the spectrum were the recent notes from Dar Al-Arkan Real Estate Development Co. The $450 million issue of 5¾% Islamic bonds due 2018 priced at 99.465 to yield 5 7/8%, or mid-swaps plus 486.5 bps.

"Traded very well all day," the London trader said.

Dar Al-Arkan notes trade up

On Tuesday Dar Al-Arkan's notes were sighted early on at 100.12 bid, 100.37 offered. Later in the European session, the notes traded at 100¼ bid, 100½ offered before moving to 100½ bid, 101 offered.

Bank Al Khair, Deutsche Bank, Emirates NBD, Goldman Sachs, Masraf Al Rayan and QInvest were the bookrunners for the Regulation S issue of Islamic bonds.

The notes closed at 100¾ bid, 101 offered, a trader said.

"The 2015s are closing at 110¼ bid, 110¾ offered on the back of the success of this deal. Very impressive effort."

Perpetuals impress

In other trading on Wednesday, the recent issue of perpetual notes that Abu Dhabi Islamic Bank priced at par moved to 105.06 bid, 105.56 offered after pricing at par and trading Monday at 105.37 bid, 105.87 offered.

The perpetual notes from Dubai Islamic Bank, which also priced at par, were seen Wednesday at 102.12 bid, 102.62 offered after Monday's levels of 102 bid, 102½ offered.

"Dubai Electricity and Water Authority, DPWorld and Dubai traded fairly well again throughout the day," the London trader said. "International Petroleum Investment Co. and Abu Dhabi National Energy Co. still well offered in the Street."

Ukraine Rail notes weaken

The recent issue of notes from State Administration of Railways Transport of Ukraine (Ukrzaliznytsia) - $500 million 9½% notes due 2018 that priced at par - has lost some strength in trading this week, said Svitlana Rusakova of Dragon Capital.

The notes were a bit weaker at par bid, 100½ offered.

"A few strong bids in the sovereign were hit following a rally," she said. "On the corporate side, Metalloinvest's 2015s were in demand while the 2018s were better offered."

African issues in focus

As Cairo-based African Export-Import Bank continued its roadshow for a possible issue of benchmark-sized dollar-denominated notes, the company's existing 8¾% 2014 notes traded at 108¾ bid, 109½ offered.

The 5¾% notes due 2016 were seen at 108 bid, 108¾ offered, a trader said.

Also from Africa, Ghana has mandated Barclays and Citigroup as bookrunners for an upcoming issue of dollar-denominated notes, a market source said.

No other details were immediately available on Wednesday.

Central China picks banks

Hong Kong-based Central China Real Estate Ltd. is planning a dollar-denominated issue of senior notes with bookrunners DBS Bank, Deutsche Bank, JPMorgan, Morgan Stanley, Nomura Securities and UBS, according to a company filing.

The proceeds from the Regulation S deal will be used to fund new and existing property projects and for general corporate purposes.

Polarcus prices bonds

On Tuesday, Dubai's Polarcus Ltd. priced $95 million of notes due 2018 with an 8% coupon, according to a company announcement.

ABG Sundal Collier, DNB Markets and Pareto Securities were the bookrunners for the deal.

The proceeds will be used to refinance existing debt.

Other details were not immediately available Wednesday.

Polarcus is a marine geophysical company.

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