Morning Commentary: Saudi Arabia tightens before pricing in short holiday week; more supply on tap

By Colin Hanner

Chicago, April 12 – With a sizable portion of the world market eyeing a long weekend, new issues out of the Middle East are keeping investors on their toes in emerging markets on Wednesday.

Of those, KSA Sukuk Ltd., obliging through Saudi Arabia, is expected to price five- and 10-year fixed-rate notes on Wednesday, a market source said.

Price has yet to be confirmed as of press time, though the five-year notes’ initial spread guidance started at 115 basis points, and the 10-year deal at 155 bps, around “20 bps back of the convention curve,” a market source said.

On Wednesday morning, a market source said both of those deals tightened by 10 bps each.

The source said books for the deals were over $25 billion together.

Citibank, HSBC, JPMorgan, BNP Paribas, Deutsche Bank and NCB Capital are stabilizing managers for the deal.

Mubadala Development Co. PJSC is expected to price $850 million of seven-year senior notes and $650 million of 12-year notes on Wednesday.

Saudi, Oman sovereigns

Saudi Arabia sovereigns were little changed during Wednesday’s session, a market source said.

The 2 3/8% notes due 2021 were quoted with a 98 bid, 98¼ offer in early morning trading and traded less than 1/10 point higher at the end of the session.

Saudi’s 3¼% notes due 2026 were quoted with a 97.23 bid, 97.41 offer in the early morning and were unchanged at the end of the session.

Oman’s 3 5/8% notes due 2021 were quoted with a 101.37 bid, 101.62 offer in the morning, drifting down less than 1/10 point less as the session came to a close.

And the 3 7/8% notes due 2022 were quoted with a 101¼ bid, 101½ offer, seeing similar declines as the 3 5/8% notes in the afternoon.

KazMunayGas sale detailed

KazMunayGas priced $2.75 billion of notes due 2022, 2027 and 2047 on Tuesday, a market source said.

The company priced $500 million of 3 7/8% five-year notes at 99.663 to yield 3.95%.

A $1 billion tranche of 4¾% 10-year notes priced at 99.02 to yield 4 7/8%.

And KazMunayGas sold $1.25 billion of 5¾% 30-year notes to yield 5 7/8%.

Joint bookrunners for the Rule 144A and Regulation S deal are Citigroup, Deutsche Bank, UBS Investment Bank, Halyk Finance, Euroclear Bank, Clearstream Banking SA and SkyBridge Invest.

KazMunayGas is an Astana, Kazakhstan-based state-owned oil and gas company.

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