Oman prints $5 billion notes; Slovenia taps two issues; investor focus shifts to Fed

By Christine Van Dusen

Atlanta, March 1 – Oman printed a triple-trancher of dollar-denominated notes and Slovenia planned issues on a Wednesday that saw investors focusing on the Federal Reserve and the likelihood of a rate hike.

“We’re heading into March with a sudden shift in investor focus from fiscal politics to the Fed,” a London-based analyst said. “That said, markets were mainly looking out for Trump’s address to the joint session of Congress, not least as the new President had promised to make a phenomenal corporate tax announcement soon.”

But there was little detail revealed during the address, “although he reiterated that he would introduce a historic reform to help corporates and the middle class,” he said. “With little takeaways, it was instead [Federal Reserve Bank of New York President William C.] Dudley who stole the show and sent Treasury yields higher and the dollar stronger.”

Dudley told CNN that the case for a rate hike has become more compelling.

“Markets are likely to remain in limbo until Friday, when Yellen and Fischer, among others, are speaking,” he said.

Bonds from Turkey remained attractive on Wednesday, with a supportive macro backdrop abating refinancing risks, the analyst said.

Investors were also eyeing China’s Yingde Gases Group after private equity fund PAG Asia Capital offered to purchase the shares of three directors who had been in conflict.

The purchase “should put an end to the corporate conflict in Yingde Gases,” according to a report from Schildershoven Finance BV.

Oman prices notes

In its new deal, Oman priced a $5 billion issue of notes in three tranches due March 8, 2022, 2027 and 2047, a market source said.

The $1 billion 3 7/8% five-year notes priced at 99.488 to yield 3.989%, or mid-swaps plus 190 basis points, following talk in the 215 bps area.

The $2 billion 5.425% 10-years priced at 99.618 to yield 5 7/8%, or mid-swaps plus 300 bps, following talk in the 245 bps area.

And the $2 billion 6½% 30-years priced at 99.360 to yield 6.549%, or mid-swaps plus 387.5 bps. Talk was set in the 425 bps area.

“The levels look appealing versus the outstanding Oman 3 5/8% 2021s and Oman 4¾% 2026 and [Gulf region] peers,” the analyst said, prior to the pricing. “We think that the new issue will see strong demand across the curve, not least given the cheapness in the back-end versus the Turkey curve, despite the fact that succession risks and oil price dependency versus local bid in the short-end suggests a steeper curve.”

Proceeds for deficit

Alizz, Citigroup, Dubai Islamic Bank, Gulf International Bank, HSBC, JPMorgan and Standard Chartered Bank were the bookrunners for Oman’s Rule 144A and Regulation S deal.

The proceeds will be used to address the sultanate’s budget deficit.

“Oman has undeniably been hit relatively hard by lower oil prices, which is reflected by the very high fiscal and external breakeven oil prices,” the analyst said. “As such, the International Monetary Fund forecasted double-digit deficits for both the fiscal and external accounts for 2017. Oman’s strength however is its current fiscal metrics, with outstanding debt projected to rise from a low basis.”

Slovenia plans

Slovenia is planning to issue taps of its euro-denominated notes due in November of 2040 and March of 2027, according to an announcement from the sovereign.

Barclays, BNP Paribas, Deutsche Bank, Goldman Sachs and Societe Generale CIB are leading the transactions.

The original issue of €1 billion notes due 2040 priced in October at 97.829 to yield mid-swaps plus 90 bps.

The original €1 billion 1¼% notes due 2027 priced in January at mid-swaps plus 63 bps.

Other details were not immediately available on Wednesday.

China Aircraft does deal

In a recent new issue, China Aircraft Leasing Group Holdings Ltd. – via subsidiary CALC Bond 3 Ltd. – priced a two-tranche issue of $500 million notes due March 8, 2022 and March 8, 2024, according to a company filing.

The $300 million 4.7% notes due 2022 priced at par to yield 4.7%.

The $200 million 5½% notes due 2024 priced at par to yield 5½%.

China Everbright Bank, Citigroup, DBS Bank Ltd. and China Everbright Securities (HK) Ltd. were the bookrunners for the Regulation S notes.

The proceeds will be used for aircraft acquisitions, business expansion in aircraft and related businesses and general corporate purposes.

The aircraft leasing company is based in Hong Kong.

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