National Bank of Abu Dhabi (NBAD), the largest lender by market value in the United Arab Emirates, picked four banks to arrange a benchmark-sized bond issue which could price within a day, lead arrangers said on Monday.
Initial price guidance for a seven-year, dollar-denominated deal has been given in the area of midswaps plus 200 basis points, with books closing as early as on Monday, a document from the leads said.
While bond issuance in August is traditionally rare, with many in the finance sector away on vacations, the turbulent market conditions of recent months mean issuers are keen to take advantage of windows whenever they appear.
“In the dollar market, we hit significant volumes last week from some big names like American Movil so the market is hot right now,” said one Gulf-based banker.
“I’m surprised they are doing it, especially as it’s the middle of Ramadan so local investors will probably be asleep. However, the market is open right now for sure.”
Much of the Middle East works reduced working hours during the Muslim fasting month of Ramadan, which began in the UAE on July 20.
NBAD mandated Citi, JP Morgan, Standard Chartered and itself for the deal, which is its second dollar-denominated bond of 2012.
The bank’s $750 million five-year 3.25 per cent bond, which launched and priced at 190 bps over midswaps on the same day in March, was bid at 103.4 cents on the dollar to yield 2.462 per cent on August 6, according to Thomson Reuters data.
Last week, Abu Dhabi repaid a $1 billion sovereign bond and fund managers could possibly look for similar exposures to replace the maturity on their portfolio.
Abu Dhabi bond
“Money from the Abu Dhabi sovereign bond that matured this week has started flowing into certain names, especially Abu Dhabi 2019 bonds, which tightened by around 25 bps last week,” said a August 5 note from fund manager Invest AD.
The yield on National Bank of Abu Dhabi’s 3.25 per cent bonds maturing in March 2017 gained three basis points, or 0.03 of a percentage point, to 2.55 per cent at 4:26 pm in Dubai. The yield tumbled 32 basis points last month.
The bank on July 24 reported a 2 per cent increase in second-quarter profit to Dhs1.05 billion ($286 million), meeting analysts’ estimates.