EEMEA OPEN: Saudi shows muscles in primary market
Saudi Arabia has opened books on a much anticipated sukuk, marketing a US$2.5bn no-grow 10-year at swaps plus 145bp-150bp.
The sovereign has an April 2027 sukuk which closed on Monday at I+120bp, according to Tradeweb.
"Fair value for the new deal looks around high 120s, so starting 20bp-25bp back," said a banker away. "It's fair for a small trade."
The exercise will complete the kingdom's external funding requirements for 2019.
The issue has had a knock-on effect for MAF, which will avoid the competing supply by waiting until Wednesday for its long 10-year green sukuk.
The banker said that MAF would have been okay to proceed but the more prudent approach is to leave a clear day for the sale.
That does not mean, however, that all Middle East issuers are taking a pause. Kuwaiti conglomerate Kipco is pressing ahead with its seven-year dollar benchmark.
Kipco has put out IPTs for the Oct 2026s at swaps plus 295bp area.
The issue's maturity will run close to Kipco's outstanding Feb 2027s. The 2027s are bid at I+257bp.
"Kipco looks quite cheap, I think it's starting 40bp back," said the banker.
Norilsk Nickel cut 25bp from IPTs for its US$750m five-year on Monday.
Demand peaked at over US$2bn, according to one of the leads, global head of DCM at VTB Capital, Andrey Solovyev.
"Substantial investor demand allowed to increase the deal volume from initial US$500m to US$750m, lower the price guidance three times and place the issue with the final yield of 3.375%," said Solovyev.
"The transaction marks the lowest coupon for a dollar Eurobond placed by Norilsk Nickel."
As for the rest of the public pipeline, Pearl Petroleum finishes meetings in Hong Kong today and Home Credit begins on Thursday.
Government-related entities form the Middle East are said to be keeping an eye on the market, with corporates from the UAE and Saudi Arabia both rumoured to be looking for a window to announce.
In broader markets, overnight trading has been very quiet, as to be expected with Japan out for the Emperor's Coronation holiday.
The big news once again features Brexit, where after Speaker of the House of Commons Bercow rejected a meaningful vote on Prime Minister Johnson's Brexit deal on Monday afternoon, Johnson will instead proceed with votes for the underlying withdrawal agreement legislation today.
The pound remains bid, cable up ¼ big figure at GBP/USD1.2986, albeit so far respecting Monday's high of GBP/USD1.3012. Other global markets are quiet; Treasuries and Bund futures are both marginally lower, while e-mini S&P futures are up five points. In Asia, the Shanghai Composite is flat and the Hang Seng is posting marginal gains.