Abu Dhabi's NBAD Eyes 5-Yr Dollar Bond, May Price Monday

Abu Dhabi's NBAD Eyes 5-Yr Dollar Bond, May Price Monday

NBAD eyes at least $500 mln from new bond issue; Guidance at MS+200 bps, could tighten further; Barcap, UBS, HSBC picked for deal

March 19, 2012 1:40 by kippreport

National Bank of Abu Dhabi is eyeing a return to global debt markets with a new five-year dollar bond which could price as early as Monday, lead managers said.

Initial guidance for the bond, which would be issued under the bank’s $5 billion programme, is at 200 basis points over midswaps.

NBAD is 70.5 percent owned by the Abu Dhabi government and is the largest bank by market value in the United Arab Emirates. It held investor meetings in Switzerland and the United Kingdom in February.

The lender issued $20 billion in a private placement in September at 4.8 percent, but Chief Executive Michael Tomalin has repeatedly said NBAD would jump back into global debt markets if a window opens up.

Earlier this year, NBAD’s Qatari counterpart, Qatar National Bank priced a five-year $1 billion at a spread of 235 basis points over midswaps, for a very similar rated credit.

Traders expect pricing on NBAD’s bond to tighten further ahead of launch.

“On paper, they (NBAD and QNB) are very similar, but ground realities differ, and investors perceive Abu Dhabi and Qatar differently,” says one regional fixed income trader.

Another trader said NBAD is a very safe name in the market, and pricing “may even get tighter.”

Barclays, HSBC, UBS, and NBAD itself are bookrunners on the latest deal. Benchmark-sized is normally understood to mean at least $500 million.

Regional issuers will be buoyed by improving market sentiment concerning the euro zone debt crisis as well as strong investor demand for top-rated Gulf paper demonstrated by previous issues this year.

Abu Dhabi’s 5-year credit default swaps (CDS) , or the cost to insure against default stood at around 118 basis points levels on Friday from nearly 130 basis points at the beginning of the month, according to Thomson Reuters data.

By Rachna Uppal (Additional reporting by Mala Pancholia; Editing by Amran Abocar)