|By TAP Staff| Gulf-based borrowers, who have been returning to the international debt market in recent days after several months of relatively light issuance, are reporting strong investor interest.
Amid geopolitical tensions in Ukraine and economic instability in some emerging markets, Gulf economies have stood out because of their stability, thanks to their trade and state budget surpluses. The contrast appears to created attractive conditions for them to issue bonds.
Dubai-based shopping mall developer Majid Al Futtaim priced a $500 million bond issue with a ten-year lifespan on Tuesday, continuing a recent revival in offers from Gulf-based borrowers.
Final pricing for the deal came at the tight end of revised guidance of between 195 and 200 basis points over midswaps, according to a document from lead managers. Initial guidance had been set earlier on Tuesday in the 212.5 bps area.
The coupon for the bond was 4.75 percent with a reoffer price of 99.835.
High demand for the offer – the order book exceeded $2 billion just before it was closed, according to the leads – helped the company reduce the cost of its borrowing.
Family-owned Majid Al Futtaim picked Barclays, Credit Agricole, Citigroup, Emirates NBD, HSBC and Standard Chartered to arrange its sale, which is its first public debt issue since last October.
Then, it printed a $500 million hybrid bond, one of the first offers of such an instrument from the Gulf Arab region. Hybrid bonds have both debt and equity-like characteristics.
Abu Dhabi National Energy was set to price a $750 million ten-year bond on Tuesday, having cut pricing by 20 bps from initial guidance to 115 bps over midswaps after it received orders worth over three times its planned size.
This follows deals last week from the Government of Dubai and Abu Dhabi state investment fund Mubadala.
Order books for the deal were close to $2.5 billion, an earlier update from lead managers had said. The transaction is structured as Reg S/144a, meaning it is open to investors in the United States.
TAQA, rated A3/A, said last week it was meeting investors ahead of a possible bond issue. The transaction is being arranged by Bank of America-Merrill Lynch, Mitsubishi UFJ Securities, Royal Bank of Scotland, Societe Generale and Standard Chartered.
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