Abu Dhabi-based First Gulf is planning to issue Australian dollar-denominated notes maturing in five years, according to an e-mailed statement from Nomura Holdings Inc., which is managing the transaction along with Australia & New Zealand Banking Group Ltd. (ANZ) and HSBC Holdings Plc. The securities are being marketed at a yield of about 155 basis points more than the swap rate, according to two people familiar with the matter who asked not to be identified because the terms aren’t set.
National Bank of Abu Dhabi became the first Middle Eastern issuer in the Australian bond market when it placed A$300 million ($272 million) of 5 percent 2018 securities in February 2013, before returning to the market two weeks ago with a A$400 million five-year deal. NBAD, rated Aa3, two levels above First Gulf by Moody’s Investors Service, priced its 2019 4.75 percent securities at a spread of 125 basis points on March 12. The gap has since narrowed to 119 basis points, ANZ prices show.
First Gulf carries a credit rating of A2 at Moody’s, the sixth-highest grade, according to data compiled by Bloomberg.
A global rally in credit spreads has compressed bank borrowing costs, with the average premium over the swap rate for single A rated financial company bonds issued in Australia narrowing to 117 basis points at the end of last week from 164 basis points a year earlier, according to a Bank of America Merrill Lynch index.
First Gulf’s Kangaroo bond transaction is expected to price by tomorrow, the people familiar with the matter said.
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