Abu Dhabis Tourism
Development & Investment Corp (TDIC) launched a $1bn five
year bond on Thursday, sustaining the strong momentum for Gulf
issuers with a fairly priced and globally distributed
The strong demand and stable aftermarket performance in
line with recent transactions from the Gulf confirmed
investor demand for high-quality credits in the region despite
the large amount of supply in recent months, said
On Thursday, TDIC (Aa2/AA/AA) via bookrunners HSBC, BNP
Paribas, Citigroup and Standard Chartered released official
pricing guidance of 400bp area over US Treasuries for a $1bn
five year deal.
Around 300 accounts generated a total $6n of demand, which
allowed the leads to lower the re-offer yield for the Reg S
144a deal to 6.579%, or 390bp over US Treasuries.
The recent supply of the sovereign and state-backed peer
Mubadala over the past three months provided the pricing
guidance. TDICs 2014s represent a 150bp pick-up to Abu
Dhabis April $3bn 2018s.
This represents a 75bp to 80bp premium to Mubadala that issued
a $1.75bn dual tranche five and 10 year deal at the end of
April, the first non-sovereign issuer from the Middle East to
price a dollar benchmark since Taqa last July. In April,
Mubadala paid a 100bp to 125bp premium over the sovereign to
launch its debut issue. TDICs pricing was right for
investors, though, with the deal six times oversubscribed and
250 accounts participating.
On Wednesday, the borrower finished its week-long roadshow,
which in the Gulf-leg of the tour featured the chairman of the
state-owned company, Sheikh Sultan Bin Tahnoon Al Nahyan. A
banker on the deal said the high-profile delegation reassured
investors of the companys state-backed status and
addressed fears over its core exposure to cyclical industries
tourism and property.
This contrasts with Mubadalas more diversified business
streams, which along with the softer market tone this
week accounts for TDICs premium over Mubadala. The
bonds feature a change of control put in the event that the Abu
Dhabi governments stake in the borrower falls below 100%.
The US took 30%, Europe 33.5%, the GCC 25%, and Asia
"This is the first deal from Abu Dhabi with Asian participation
in double digits and benefits from a beautifully balanced and
diversified order book, both geographically and by type," said
Andrew Dell, head of debt capital markets for the CEEMEA region
at HSBC in Dubai. Asset managers bought 47% of the bonds, banks
35%, hedge funds 11% and others 7%.
However, like similar cross-border deals from issuers in the
region, it is unclear to what extent traditional emerging
market investors participated in the deal as London and
US-based MENA accounts may skew the distribution statistics,
In addition, dedicated emerging market corporate bond investors
have strong concerns over the risk management and governance
structures of the new issuers coming out of the Gulf. "I did
not participate in the deal because there is very little
transparency, disclosure or guidance as to the companys
investment plans," said Polina Kurdyavko, portfolio manager at
BlueBay Asset Management.
A five year tenor was chosen as the sweet spot for global
investors while the single-tranche format was the most
efficient structure to ensure liquidity in the transaction
given the $1bn ceiling. "Investors wanted a large, liquid
benchmark in a single tranche and the issuer wanted to
establish a well performing debut issue with a diversified
global distribution," said Samad Sirohey, managing director at
Citigroup in Dubai.
The deal tightened from its 99.668 reoffer price to 100.375.
"The good aftermarket performance of the Abu Dhabi and Mubadala
deals and investor appreciation and understanding of the Abu
Dhabi credit helped ease concerns about technical pressure
caused by potential supply of paper from the region," said
Bankers away from deal said TDICs debut ticked all the
right boxes. "This was a completely fair and sensible
transaction since the strong demand, pricing, and geographic
distribution of the deal was not surprising as the Abu Dhabi,
Qatar and Mubadala transactions displayed exactly the same
features," said one.
- Shuua Capital agreed to hand
state-owned investor, Dubai Banking Group (DBG), a 48.4% equity
stake in the investment bank on Thursday, to settle a
long-standing row that threatened to tarnish the image of the
emirate. DBG will receive 515 million shares in return for
convertible bonds with a face value of $408m.
When the convertible matured in December 2008 and Shuaas
shares were trading well below the Dh6 strike at Dh2.7, Dubai
Group refused to convert the bond into shares. It said that
conversion was not mandatory, and therefore demanded full cash
redemption of principal and interest. The dispute resolution
has boosted Shuuas share price and its creditworthiness,