Ramadan Sukuk deal flow as tightest spread for a year issued by Qatari Bank’s $750m print

A Riyal denominated sukuk has been issued by the Saudi International Petrochemical Company (Sipchem). The company announced the successful completion of the issuance amounting to SAR 1.0 billion (Sukuk) on June 16, 2016. The Sukuk was priced at 235 bps over six (6)-month SAIBOR for tenor of five (5) years maturing on June 16, 2021. Riyadh Capital and NCB Capital helped to arranged the private issuance.

In the hard currency space, the Commercial Bank of Qatar issued a Eurobond which achieved the tightest spread for a MENA financial institution this year, conventional or Sukuk.

Whilst the issuance was not a sukuk, demand for bond indicates strong investor appetite, a good sign of market demand which is likely to be tested with several large planned issuances post Ramadan. Most eagerly anticipated is a potential sovereign issuance by Saudi Arabia, as well as by Aramco, the Saudi national oil giant.

Strong investor appetite

The Commercial Bank of Qatar issued a US$750 million five-year senior unsecured bond under the Bank and its subsidiary, CBQ Finance Limited’s USD 5 billion European Medium Term Note (“EMTN”) Programme. The issue was arranged and offered through a syndicate of Joint Lead Managers comprising Citibank, HSBC, Morgan Stanley and National Bank of Abu Dhabi and attracted substantial global interest.

The bond was issued at a spread of 215 basis points over mid-swaps, carries a coupon of 3.250% and has a final reoffer yield of 3.385% per annum. The spread was the tightest achieved by a MENA financial institution in 2016 (for both conventional and sukuk) and the coupon is also the lowest for a MENA conventional financial institution since May 2015, reflecting strong investor appetite. The issuance is to listed on the Irish Stock Exchange and is rated A2 by Moody’s and BBB+ from Standard and Poor’s.