dcsimg
Comment - Leader

Sukuk on rebound from reality check

As if international sukuk were not already rare enough with only six dollar issuers so far in 2014, this week brought an even more unusual sighting — a deal that didn’t have an outrageously oversubscribed order book. Turkiye Finans can thank Damac Real Estate Development’s aggressive handling of investors for that, and so may the rest of the sukuk market.

  • By Dan Alderson
  • 16 Apr 2014
Email a colleague
Request a PDF

The sparse nature of the sukuk market is such that there are investors who put in big orders for any deal that comes to market. After all, who knows when they will next get the chance in such a supply-starved market, and what if allocations are only a fraction of what they want? It’s a vicious circle seen on every sukuk.

But occasionally a deal comes along that makes them rethink. Damac did just that at the start of April. On achieving a $2.7bn order book for a $500m deal, the eager debutant snatched another $150m on top while also ratcheting down its price from mid-300bp over mid-swaps to 310bp. That ploy brought a two-point price plunge in the secondary market from which the deal still has not recovered, despite a rally in sukuk since then.

Turkiye Finans had to face that down this week as the next sukuk issuer to come to market. Its final book size of $1.4bn was nothing to be sniffed at and the bank priced inside guidance with a secondary rally thereafter. But it was a lot less than the five to 10 times oversubscription of other deals this year, and the groggy early showing of just $750m of demand only hauled itself off the mat once those buyers with recently bloodied noses were sure that final pricing would be fair.

As elsewhere, memories in the sukuk market are short until served a stark reminder. Those who took part in the Turkey sovereign sukuk of 2012 also got stuffed after it increased its offering from $1bn to $1.5bn. That deal is still four points under par and the lesson will have been fresh in people’s minds this week after Damac. 

In that sense, Damac can be seen as a healthy check on exuberant issuance. We can only hope that Turkiye Finans’s result will not prompt a quick return to type.

  • By Dan Alderson
  • 16 Apr 2014

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 27 Oct 2014
1 JPMorgan 278,914.39 1111 7.98%
2 Barclays 251,894.67 869 7.21%
3 Citi 250,194.86 968 7.16%
4 Deutsche Bank 244,474.93 992 7.00%
5 Bank of America Merrill Lynch 240,849.72 857 6.89%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 28 Oct 2014
1 Deutsche Bank 48,610.51 125 7.60%
2 BNP Paribas 45,308.93 185 7.08%
3 Citi 34,756.99 97 5.43%
4 Credit Agricole CIB 31,024.72 128 4.85%
5 JPMorgan 30,825.29 75 4.82%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 28 Oct 2014
1 JPMorgan 23,809.73 114 9.33%
2 Goldman Sachs 22,933.11 77 8.98%
3 Deutsche Bank 20,595.54 76 8.07%
4 UBS 19,729.52 81 7.73%
5 Bank of America Merrill Lynch 19,079.80 69 7.47%