Egypt launches €2 billion of notes; Telefonica prices; Lebanon outperforms

By Rebecca Melvin

New York, April 4 – The Arab Republic of Egypt launched €2 billion of new notes on Thursday, which put pressure on the sovereign’s existing bond yield curve.

The two tranches have maturities in 2025 and 2031. The €750 million six-year tranche was launched to yield 4¾%, which was tightened from initial talk in the 5 1/8% area; and the €1.25 billion tranche of 12-year notes was launched to yield 6 3/8%, which was tightened from initial talk for yield in the area of 6 7/8%.

Egypt was in the international bond market last on Feb. 19 when it priced $4 billion of notes due 2024, 2029 and 2049. Nevertheless, investor demand was high with order books for the new paper topping €8.6 billion, and the new issue premium to the existing curve was large at some 22 basis points, according to a market source.

Egypt’s shortest dated existing note blew out the most with a spread wider by 20.7 bps and a bond price of 100.85 bid, 101.85 offered for the 5¾% paper due 2020. The 2026 and 2030 bonds also suffered, with the spreads on those wider by 10.1 bps and 10.8 bps, respectively.

But the long end of the curve was only marginally wider, including the Egypt 8.7% notes, of which $1.5 billion priced in February, which was wider by only 1.9 bps.

Also new to the market was Telefonica del Peru SAA’s newly priced PEN 1.7 billion of 7 3/8% eight-year notes. The rare, global local-currency bond saw high demand of PEN 3.2 billion; but the issue size, which is the equivalent of $515 million, was as expected.

Overall spreads for emerging markets were little changed on the day. In the Middle East and Africa region, a big outperformer was Lebanon. The Middle Eastern country saw spreads come in by as much as 72 bps for its 6.15% notes due 2022, representing a price of 88.83 bid, 89.83 offered, according to a London-based market source.

The shorter-end of the Lebanon curve had a larger move than the longer end of the curve. The Lebanon 7¼% note due 2037, its longest-dated extant bond, for example, was tighter by 18.7 bps, at a price of 79.63 bid, 80.63 offered.

Lebanon’s 8¼% notes due 2021 were up about ¾ point on the day, with a 95.57 close on the Luxembourg exchange.

The sovereign bond spreads of nearby neighbors Jordan and Iraq were narrowly mixed, with Jordan mildly wider and Iraq tighter. The sovereign curve of Saudi Arabia was also mixed as investors eye the upcoming pricing of a megadeal by Saudi Arabian Oil Co. There were reports that the state-owned oil company is aiming to come with a deal that is inside the sovereign curve, which is contrary to typical pricing between a sovereign and the corporates within that sovereign.

Saudi Arabia’s was only mildly responsive however. Most of the curve was one to two bps tighter on the day.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.