News Column

Jumbo corporate issue breaks records

June 30, 2014

ABU DHABI-BASED telecoms operator Etisalat has sold $4.3 billion worth of bonds, setting one record as the region's biggest corporate issue ever and another for the cheapest pricing, bankers said.The issue's success was due partly to factors specific to Etisalat, which is rated Aa3/AA-/A+ by the main credit agencies, including its state ownership and healthy financial profile.

It is also partly due to the Gulf's strong economic performance during the global instability of the past few years, which has made more investors view the region as a safe haven.

In its maiden bond issue, Etisalat sold fixed-rate debt in four tranches with maturities ranging from five to 12 years to replace some of the debt used to fund its 4.2 billion euro ($5.7 billion) purchase of a majority stake in Morocco'sMaroc Telecom from France'sVivendi.

The firm tightened pricing for a seven-year, 1.2 billion euro tranche to 80 basis points over mid-swaps, 20 bps inside its initial thoughts, while a 12-year euro tranche of the same size was priced at 110 bps, 15 bps within the guidance.

The issue eclipsed past jumbo bond issues in the Gulf, including a $3.5 billion Islamic bond from Dubai property developer Nakheel, which was repaid in 2009, bankers said.

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Source: Gulf, The (Bahrain)

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