Saudi Arabia $7.5 billion oversubscribed; Israel prices €2.5 billion

By Paul A. Harris

Portland, Ore., Jan. 9 – Emerging markets debt ground tighter across the board on Wednesday, according to a sellside source who added that all of the signals appeared to be turning green.

Whether a more vigorous new issue pipeline will follow is not yet certain, the source added, noting that at present the pipeline is not big.

In Wednesday's action Kingdom of Saudi Arabia (A1/A+) priced $7.5 billion of notes in two tranches, in a deal that was massively oversubscribed.

And State of Israel launched and priced €2.5 billion of senior notes (expected ratings A1/AA-/A+) in two evenly split tranches.

Saudi Arabia oversubscribed

Saudi Arabia (A1/A+) priced $7.5 billion of notes in two tranches on Wednesday, in its first deal to come to market in the wake of the brutal murder of journalist Jamal Khashoggi.

The deal featured $4 billion of 4 3/8% long 10-year bonds due April 16, 2029, which priced at Treasuries plus 175 basis points, tight to spread talk in the 185 bps area. Initial guidance was in the 200 bps area.

Saudi Arabia also priced $3.5 billion of 5¼% 31-year notes at Treasuries plus 230 bps, tight to spread talk in the 235 bps area. Initial guidance was in the 250 bps area.

The $7.5 billion deal played to orders in excess of $25 billion, a source said.

BNP Paribas, Citigroup, HSBC, JPMorgan and NCB Capital Markets were the bookrunners.

Israel prices €2.5 billion

Israel launched and priced €2.5 billion of senior notes (expected ratings A1/AA-/A+) in two evenly split tranches.

A €1.25 billion tranche of 1½% 10-year notes priced at a 75 bps points spread to mid-swaps.

A €1.25 billion tranche of 2½% 30-year notes priced at a 115 bps spread to mid-swaps.

Barclays, BNP Paribas and Goldman Sachs International were the joint bookrunners. Goldman Sachs will bill and deliver.

Turkey launches 10-year deal

Republic of Turkey launched $2 billion of 7 5/8% notes due April 26, 2029 to yield 7.68%, according to market sources.

Initial yield talk was 7 7/8%, the source added.

The deal comes in an attempt by Turkey's financing authorities to put in place some longer-duration debt ahead of the March elections, a source said, adding that it was Turkey's longest duration dollar-denominated deal in nine months.

The reoffer price was not available at press time.

Citigroup, Deutsche Bank Securities and JPMorgan.

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