Amount:$500m Reg S only
Maturity:5 March, 2024
Spread at reoffer:mid-swaps plus 180bp; 184.7bp over the 2.5% January 2024 US Treasury
Launch date:Tuesday, February 26
Payment date:March 5
Joint books:First Abu Dhabi Bank, HSBC, Gulf International Bank, JP Morgan, Standard Chartered
Final books peaked at around $5.45bn with more than 280 orders. It’s the first deal from a Saudi investment grade private corporate issuer, though there have been sub-investment grade issuers before.
They could have taken more, but a $500m deal is all they wanted from the start and they communicated that to the market. They identified the need for the funding for refinancing purposes.
The company sees using the bond markets as a natural evolution of the company’s funding. It is committed to the sukuk market going forward.
The deal was well received internationally. Investors mostly looked at other Saudi corporates such as Saudi Electric Company and SABIC as comparable issuers, as well as other similarly rated corporates from the broader GCC such as Majid Al Futtaim, Emaar Malls and Emaar Properties.
Guidance for the sukuk was put out at the start of the day in Saudi Arabia at 225bp over mid-swaps and books had reached $2.5bn by the time of the London open. Guidance was later updated to 190bp-200bp over mid-swaps before pricing at 180bp over.
Kingdom of Saudi Arabia 6%
GCC (ex-KSA) 33%
US Offshore 2%
Distribution by investor type
Insurance/pension funds 4%
Central banks/agencies/corporates 4%
“…I see this as flat to fair value.”
“…it’s a welcome addition to the landscape but the scarcity value for this kind of paper has driven the pricing tight.”