U.A.E. Banks to Morocco Return to Bond Market as Yields DropArif Sharif and Dana El Baltaji
Two United Arab Emirates banks raised $1.3 billion from bonds sales and Morocco plans to boost the size of its existing dollar-denominated notes as Middle East issuers take advantage of falling borrowing costs.
Emirates NBD PJSC sold $1 billion in bonds that don’t mature, the second sale by the Dubai-based lender this year, according to four people familiar with the matter. Abu Dhabi Commercial Bank PJSC returned to the bond market for the third time this year, selling $300 million in 10-year securities, two people said. Morocco hired Barclays Plc, BNP Paribas SA, Citigroup Inc. and Natixis to manage its sale, one person said.
“It’s a good time to tap the debt market and take advantage of the low yield levels at the moment,” Hakim Azaiez, the head of investment at GCA Asset Management in London, said by e-mail today. “There is also a factor that interest rate may rise and that would be another reason for this flow of issuance.”
The average yield on bonds of financial institutions in the six-nation Gulf Cooperation Council fell 19 basis points this year to 2.88 percent on May 21, according to the HSBC/NASDAQ Dubai GCC Conventional Financial Services US Dollar Bond Index. The offerings bring sales in the Middle East and North Africa to more than $21 billion this year and compares with $19.3 billion in the year-earlier period, according to data compiled by Bloomberg.
Emirates NBD, the U.A.E.’s second biggest bank, priced the bond to yield at 5.75 percent, said the people, who asked not to be named because the details are private. The lender last tapped international bond markets in March, raising $750 million in 10-year notes. Abu Dhabi Commercial Bank sold its debt at 220 basis points over the benchmark midswap rate, the people said.
The yield on Morocco’s $1 billion of 4.25 percent bonds due December 2022 has declined 13 basis points, or 0.13 of a percentage point, this year to 4.06 percent at 3:55 p.m. in Dubai. The kingdom sold the securities along with its debut 30-year securities in December.