(Adds pricing details and comments)
By Sudip Roy
LONDON, April 11 (IFR) - Saudi Arabia has begun marketing
its debut sukuk about 20bp back of its conventional curve.
The sovereign has opened books on a five-year tranche at
115bp area over mid-swaps. It also marketing a 10-year tranche
at plus 155bp area.
The kingdom's October 2021 conventional notes are trading at
a Z-spread of 93bp, according to Tradeweb. October 2026s are at
"I think there is very little premium here. Very likely to
be tightened, which would bring the bond very close to the
existing five-year and 10-year instruments and therefore
offering little pick-up for a one-year extension over the
existing 2021 and 2026 non-sukuk Eurobonds," said Koon Chow, FX
and macro strategist at UBP.
Another investor, however, said the starting point was
attractive. "It looks reasonably good value, probably 15-20bp
cheap to the curve," he said.
A banker away from the deal suggested ahead of IPTs that a
20-25bp pick-up would be a fair starting point for the sukuk
offerings. He said the final level would depend on the
sovereign's size targets.
Saudi Arabia is expected to price the biggest ever sukuk,
beating the US$4bn that Qatar raised in 2012.
The deal is Wednesday's business. Citi, HSBC (B&D) and JP
Morgan are global coordinators. They are joined as leads by BNP
Paribas, Deutsche Bank and NCB Capital.
The 144a/Reg S deal will be rated A1 by Moody's and A+ by
(Reporting by Sudip Roy, editing by Julian Baker)