Investors digest Saudi Arabia mega-deal; Isbank ticks up; Jordan, Banco Macro, Cell C ahead

By Christine Van Dusen

Atlanta, Oct. 24 – Emerging markets investors on Monday remained focused on Saudi Arabia after the sovereign’s historic $17.5 billion issue of notes, which flooded the market with supply.

“We are looking into a busy week with a decent amount of macro data, Fed-speak and geopolitical events,” a London-based analyst said. “Markets have started to digest the huge amount of issuance last week, notably after Saudi Arabia finally concluded its debut bond transaction.”

Said a trader, “Nice and gentle market open, with United States Treasuries a few basis points tighter, put us 8 basis points tighter from this time last week. Main difference, week-over-week, is the huge glut of EM issuance that certainly took cash out of the market.”

The Saudi Arabia deal continued to benefit from “amazing liquidity,” which on Monday continued to “keep a tight bid-offer,” he said.

The sovereign’s $5.5 billion 2 3/8% notes due in 2021 priced at 99.007 to yield 2.588%, or Treasuries plus 135 bps. On Monday the notes were spotted at 99¾ bid, 99.85 offered.

The $5.5 billion 3¼% notes due in 2026 priced at 98.679 to yield 3.407%, or Treasuries plus 165 bps.

On Monday they traded at 99.65 bid, 99¾ offered.

And the $6.5 billion 4½% notes due in 2046 priced at 98.015 to yield 4.623%, or Treasuries plus 210 bps. On Monday they were seen at 99.70 bid, 99.95 offered.

The last tranche saw buying interest on Monday, particularly from investors in Asia and the Middle East, a trader said.

Isbank sees demand

Looking to other new deals, the notes from Turkey’s Turkiye Is Bankasi AS (Isbank) – $600 million 5½% notes due 2022 that priced at par – saw demand on Monday, a trader said.

The notes were seen on Monday at 100.12 bid, 100.37 offered.

BofA Merrill Lynch, Commerzbank, MUFG Securities, National Bank of Abu Dhabi and Standard Chartered Bank were the bookrunners for the Rule 144A and Regulation S deal.

Akbank releases earnings

Investors were keeping an eye on Turkey-based Akbank TAS, which on Friday reported a profit that matched consensus and reflected an environment that continues to be benign for most lenders, the analyst said.

Fee income declined, but loan growth and capitalization were solid, he said.

“All in all, Akbank launched the Turkish banks third-quarter earnings season with continuingly and unsurprisingly strong numbers,” he said. “We continue to consider Akbank to be one of the most conservative banks in Turkey ... For credit investors, that higher quality comes with a price, as Akbank bonds trade among the most expensive in the Turkish credit space.”

Jordan sets tenor

Jordan set the tenor at 10¼ years for its upcoming issue of dollar-denominated senior notes, according to an announcement from the sovereign.

Jordan previously announced plans for a two-tranche issue of notes due in 10 and 30 years.

Citigroup and JPMorgan are the bookrunners for the deal.

Banco Macro to issue notes

Argentina’s Banco Macro SA is planning to offer up to $400 million of notes due 2026 during the fourth quarter, according to a company announcement.

The proceeds from the Rule 144A and Regulation S deal will be used to refinance debt, make loans and for working capital.

The company previously announced that its board of directors approved the issuance of up to $400 million class A subordinated notes under its global medium-term note program.

The issuer is a financial institution based in Buenos Aires.

Cell C plans issuance

South Africa’s Cell C (Pty) Ltd. is looking to issue $600 million of notes due in 2021 (/B/), a market source said.

Other details were not immediately available on Monday.

The issuer is a telecommunications company based in Randburg, South Africa.

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