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Middle East Report 2009| pfi| 23

Emaar Properties is considering raising US$4bn from bond and sukuk

ment firm, which is 100% owned by the Abu Dhabi gov- ernment, was the first Gulf corporate to tap the Eurobond market this year, and indeed the first since last summer, when on July 24 2008 the Abu Dhabi National Energy Company (TAQA), rated Aa2/AA–, raised US$1.5bn from a dual-tranche Reg S/144a deal.

Mubadala placed a US$1.25bn 5.75% five-year deal at 99.019 to yield 5.98% or 395bp over Treasuries, while the US$500m 7.625% 10-year offering came at Treasuries plus 462.5bp with a reoffer price of 99.278 to yield 7.73%. Citigroup, Goldman Sachs and RBS jointly led the deal. A day before, the leads released official price guidance at 400bp over Treasuries for the five-year piece and Treas- uries plus 470bp for the 10-year portion. This was inside price whispers heard earlier of 412bp for the five-year and 467bp for the 10-year offering.

With a significantly oversubscribed orderbook, Mubadala's inaugural bonds were trading higher in the sec- ondary market the next day. On a price basis, the 2014s were at 100.25–100.375 while the 2019s were at 101.25–101.375. Mubadala's deal was really priced with the Abu Dhabi curve as the main comparison. At 395bp over Treasuries, the five-year tranche priced inside the Abu Dhabi sovereign bond. Mubadala's senior notes were around 100bp–120bp wider than where the Abu Dhabi US$3bn dual-tranche was trading at the time of pricing. Then, the sovereign 2014s were quoted at 295bp bid over Treasuries yielding 4.873% mid, while the 2019s were then seen at Treasuries plus 340bp for a yield of 6.373% mid.

Sovereigns and corporates line up

The Kingdom of Bahrain (A2/A/A) is expected to make a splash in the bond market by June. It is looking to bring a US$500m five-year sukuk through Calyon, Deutsche Bank and HSBC. The Kingdom is also planning a BD250m three-year domestic issuance. Bahrain has a strong investor following and usually prints one Eurobond a year. Last year, it printed 26 Sharia-compliant bonds worth US$716m, making it the Gulf's most prolific sukuk issuer. Although the Sultanate of Oman (A2/A) has no acute need for external financing, it has become the latest Gulf sov- ereign to consider tapping the international bond market. It is well-placed to do so and has ample resourced to fund its deficits in 2009, 2010 and beyond. Bankers in Dubai said that if Oman prints a Eurobond, the issue should prove pop- ular due to its being a debut. The State of Kuwait (Aa2/AA–/AA) has also hinted at possible new offerings. The Kingdom of Saudi Arabia (A1/AA–/AA–) has no plans to print international debt securities but the Saudi Arabian Monetary Authority's governor, Muhammad al-Jasser, last February called on Saudi banks to issue bonds to raise addi- tional finance and ensure long-term funding access to strategic projects. The corporate space is expected to be dom- inated by borrowers from the Emirates. Origination man- agers believe Mubadala's success has blazed a trail for more

new supply and attention will now turn to the next issuer to emerge from the Gulf's US$50bn-plus issuance pipeline. Abu Dhabi’s Tourism Development and Investment Company (TDIC), rated Aa2/AA/AA, is understood to have mandated Citigroup and Goldman Sachs for a benchmark offering. Another Emirati corporate, Dolphin Energy, is planning a bond poised for June. BNP Paribas and RBS are believed to have won the mandate for the offering, which is part of the US$3bn refinancing pack- age. RBS is the financing adviser on the overall refi- nancing, which will include an Islamic tranche. Emaar Propertiesis considering raising US$4bn from bond and sukuk sales. Half will come from its existing EuroMTN programme, with the other US$2bn coming from the sukuk issuance programme to which HSBC and RBS have been mandated as leads. No timescale has been revealed but it is assumed nothing will happen until after July. The Abu Dhabi Water and Electricity Authority

(ADWEA) head of privatisation Abdulla al-Nuaimi last month said that the company could tap the bond markets. The state-owned commodity investment firm in Abu Dhabi, International Petroleum Investment Company (IPIC), rated Aa2/AA/AA, has no pressing needs to raise money, according to its managing director, Khadem al- Qubaisi. However, some syndication officials believe IPIC could tap the market sooner than expected as it is seeking a US$5bn to refinance its recent acquisitions. Apart from the US dollar market, Abu Dhabi-based bor- rowers are keen to raise funds through Samurai bonds. Abu Dhabi Commercial Bank, Abu Dhabi Investment Authority and TAQA are all on the waiting list to print yen offerings. The shareholders of Union Properties in Janu- ary approved the issue of a non-convertible bond worth Dh2.5bn to strategic investors. Qatar's Ras Laffan Liquefied Natural Gas Company (Aa2/A/A+) is considering raising funds through its US$10bn bond issuance programme. Goldman Sachs and Lehman Brothers led the previous two deals. Now, however, invest- ment banks are lining up to land the big Qatari ticket. In the last five years, it has attracted US$6.05bn in the inter- national debt capital markets. Bahrain Telecommunications Company (Batelco) is planning to raise up to US$1.5bn to finance its expansion into Africa. Unicorn Investment Bank, a Bahraini financial insti- tution, is planning to sell US$425m in sukuk by August. The proceeds from an ijara-structured issue will finance the bank’s expansion plans in Asia and Europe. In domes- tic markets, Bahrain's Al-Salam Bank and Tadhamon International Islamic Bank in January signed a deal to issue sukuk in manfaa format in Saudi Arabia worth SR857m with Rawacheen al-Hijaz appointed as lead manager. Investcorp (Baa2/BBB/BBB) is eyeing the Malaysian ringgit market and held a non-deal roadshow through Aseambankers last year for a possible debut in the world's largest domestic sukuk market. .

Mubadala’s inaugural bonds were trading

higher in the secondary market the next day.

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