Issuance from Ghana; Emaar moves lower, Burgan ticks higher; YPF plans Swiss franc notes

By Christine Van Dusen

Atlanta, Sept. 8 – Ghana priced notes on a favorable Thursday for emerging markets credit, even as oil prices continue their climb.

“Oil prices have continued the upward trend overnight on a decline in U.S. crude inventories, with Brent crude now trading at $48.90 a barrel,” a London-based analyst said. “Many expectations also lie on the meeting of oil producers in Algiers at the end of the month, with talks centered on a potential output freeze.”

Against this backdrop, the primary market has picked up a bit.

“Middle Eastern issuers have used the short window after the summer lull and before next week’s local holidays to tap international debt markets,” he said.

Those new issues from the region were mixed in trading, he said.

The new issue of notes from Kuwait’s Burgan Bank SAK – $500 million 3 1/8% notes due 2021 that priced at 99.30 to yield mid-swaps plus 215 basis points – traded Thursday at 99.87 bid, 100.12 offered, a trader said.

HSBC, Standard Chartered, National Bank of Abu Dhabi, Emirates NBD and Societe Generale were the bookrunners for the Regulation S deal, which attracted more than $1.5 billion of offers.

Dubai-based property developer Emaar Properties’ new issue of $750 million 3.635% Islamic notes due 2026 that priced at par to yield mid-swaps plus 225 bps was seen on Thursday at 99.85 bid, 99.97 offered.

Standard Chartered, Emirates NBD, National Bank of Abu Dhabi, First Gulf Bank, Dubai Islamic Bank PJSC, Union National Bank, Mashreqbank, Noor Bank and Bank ABC were the bookrunners for the Regulation S deal.

Emaar falls, Burgan climbs

The final book for Emaar’s deal was more than $2.3 billion, a trader said.

“On face value, the Emaar ticked more boxes – sukuk, redemption last month, corporate, well-regarded name,” another trader said. “However, in a mildly surprising first hour, Burgan raced 90 cents higher and Emaar pushed below par.”

He called the effort from Burgan “impressive,” while “Emaar struggled from the word ‘go’ and traded as low as 99.70. The bond just didn’t have any follow-through demand and the short term holders were happy exiting near re-offer or slightly below.”

Perpetuals remain in favor

Other bonds from the Middle East traded “fairly well” on Thursday, a trader said, “apart from a couple of well-offered bonds that are struggling to clear.”

Islamic perpetual bonds were again popular.

“Quiet few days coming up, with Eid celebrations in the region seeing a lot of people out on holiday,” he said.

Lat-Am stays firm

From Latin America, there was little follow-through as firmness continued, a New York-based trader said.

“Flows, volumes and inquiry are markedly lower,” he said. “However, we do seem to be holding yesterday’s gains.”

The curve for Mexico-based Cemex SAB de CV “has pulled back a bit,” he said.

Ghana sells bonds

Ghana sold $750 million notes due in 2022 at a yield of 9¼%, according to an announcement from the finance ministry.

The notes were initially talked in the high-9% area.

BofA Merrill Lynch, Citigroup and Standard Chartered were the bookrunners for the deal.

The bond has a weighted average life of five years, with three equal repayments $250 million in September 2020, September 2021 and September 2022.

“Like the four previous issues, this year’s bond attracted investors from the United Kingdom, Europe, the United States, Middle East and Asia,” the statement said.

Ghana attracts orders

The final book for Ghana exceeded $4 billion, the finance ministry said.

Other details were not immediately available on Thursday.

“The West African nation held investor meetings at the start of August but postponed the transaction, initially planned for Aug. 3 or 4, likely on the matter of pricing, as the sovereign was said to have targeted a single-digit yield,” a London-based trader said. “The main purpose is to refinance $400.6 million outstanding in the Ghana 8½% 2017s.”

Momentum and timing are on the sovereign's side, this go-around, he said.

“We are now out of the summer lull and, more importantly, [saw] a tremendous rally in the Sub-Saharan African space,” he said. “Nonetheless, risks are tilted towards the downside as the economy remains constrained by the dependency on commodities – gold, cocoa, oil – power cuts and floods. Moreover, inflation remains at high double-digit levels.”

Roadshow for YPF

In other deal-related news, Argentina’s YPF SA will set out on Sept. 12 for a roadshow to market an inaugural issue of Swiss franc-denominated notes, a market source said.

Credit Suisse and UBS are the bookrunners for the deal.

The roadshow will be held in Switzerland and end on Sept. 13.

YPF is a petroleum and natural gas company based in Buenos Aires.

© 2015 Prospect News.
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