Almarai prices $500 million five-year sukuk at mid-swaps plus 180 bps; QIIB guides

By Rebecca Melvin

New York, Feb. 26 – A pair of credits from the Middle East were talking deals in the emerging markets debt market on Tuesday, with pricing expected later in the session.

Saudi Arabia’s Almarai Co. priced $500 million of 4.311% five-year sukuk at par for a yield spread of mid-swaps plus 180 basis points, which was nearly 50 bps tighter than initial talk amid high investor orders. And Qatar International Islamic Bank guided its $500 million five-year Islamic bonds, or sukuk, to a similar yield spread of yield mid-swaps plus 175 bps to 185 bps.

Qatar’s deal was initially talked at mid-swaps plus 200 bps, which represented only 20 bps of tightening, and its order book was more modest.

The order book for the Almarai five-year sukuk was about $5.3 billion and Qatar order book was in excess of $2.9 billion.

The Qatar International Regulation S notes were being sold via Al Khalij Commercial Bank, Barclays, Barwa Bank, Boubyan Bank, Maybank IB, QNB Capital and Standard Chartered Bank as joint bookrunners.

While First Abu Dhabi Bank, Gulf International Bank, HSBC, JPMorgan and Standard Chartered were joint bookrunners of the Almarai Regulation S deal.

Emerging markets were mostly quiet elsewhere, with even China subdued after pricing a group of bond issues overnight.

But the appetite for emerging markets debt was expected to remain strong as has been the case since the perceived shift in the U.S. Federal Reserve rate hike cycle to a go-slow approach at the turn of the new year.

China stimulus has also helped the market move ahead, with bond yields dropping and credit spreads tightening onshore amid the Chinese policy makers push to support the economy.

In U.S. markets, stocks closed modestly lower and Treasury yields slipped, which crude oil prices edged up.

U.S. stocks, which have trended higher in the past six weeks, along with emerging markets debt and high-yield bonds, felt as if they were treading water on Tuesday. U.S. Federal Reserve Chairman Jerome Powell’s comments that affirmed a patient approach, which helped investors, but the ongoing trade negotiations between the U.S. and China continues to create an air of uncertainty.

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