Happy UAE National Day!
Looks like the regional credit markets took comfort in the DOF press release that came out very early yesterday morning, announcing that the Dubai World restructuring would be limited to Nakheel and Limitless, and would exclude DP World, JAFZA, P&O Ferries, Istithmar etc., and total value of debt carried by the companies subject to the restructuring process amounts to approximately US$26 billion, of which approximately US$6 billion relates to the Nakheel sukuk. I had noted in my comments yesterday that when looking for opportunities after the Dubai World crisis, it was important to look for names that had been unfairly punished – names I had highlighted as being particularly attractive included JAFZA (yields expanded by almost 10% since Wednesday of last week), DP World (yield expansion of 265 bps), Dubai DOF USD Sukuk (yield expansion of 250 bps), TDIC Finance (yield expansion of 65 bps), TDIC Sukuk (yield expansion of 74 bps) and CBB 14 (yield expansion of 81 bps).
The flows on our desk were heavily skewed towards the buying of these names plus other stable, GCC Government backed names like Qtel, NBAD 14's, Qatar Sovereigns and TDIC. The table below shows how yields as of this morning compare with those that we saw offered yesterday, pre-London open, for the names I had proposed as opportunistic buying opportunities.
Issue | Offer Yield - Pre Announcement % | Offer Yield - Tuesday AM % | Offer Yield - Wednesday AM % | Yield Contraction - Tuesday to Wednesday |
Abu Dhabi Sovereign 12 | 2.70 | 2.94 | 2.84 | -10.00 |
Abu Dhabi Sovereign 14 | 3.80 | 3.92 | 3.80 | -12.00 |
Abu Dhabi Sovereign 19 | 5.25 | 5.31 | 5.31 | 0.00 |
Mubadala 14 | 3.81 | 4.01 | 3.94 | -7.00 |
Mubadala 19 | 5.88 | 6.14 | 6.07 | -7.00 |
TDIC Finance | 4.37 | 5.02 | 4.95 | -7.00 |
TDIC Sukuk | 4.21 | 4.95 | 4.83 | -12.00 |
Dolphin Energy | 5.38 | 5.61 | 5.61 | 0.00 |
Taqa 6.6 13 | 4.15 | 4.65 | 4.57 | -8.00 |
Taqa 14 | 4.52 | 5.11 | 4.63 | -48.00 |
Taqa 19 | 5.78 | 6.04 | 6.04 | 0.00 |
Dubai Sukuk 14 USD | 6.32 | 8.82 | 7.57 | -125.00 |
JAFZA Sukuk 12 | 8.11 | 17.59 | 12.91 | -468.00 |
DP World Sukuk 17 | 7.11 | 9.76 | 9.13 | -63.00 |
CBB 14 Sukuk | 4.07 | 4.88 | 4.52 | -36.00 |
Qatar 14 | 3.62 | 3.71 | 3.49 | -22.00 |
Qatar 15 | 3.73 | 3.89 | 3.73 | -16.00 |
Qatar 19 | 5.00 | 5.03 | 4.96 | -7.00 |
Qatar 20 | 5.06 | 5.03 | 5.00 | -3.00 |
QTEL 14 | 4.20 | 4.29 | 4.29 | 0.00 |
QTEL 19 | 5.73 | 5.93 | 5.87 | -6.00 |
RASGAS 5.5 14 | 3.92 | 4.11 | 4.00 | -11.00 |
RASGAS 19 | 5.30 | 5.42 | 5.30 | -12.00 |
As you can see, there was yield contraction across the spectrum, with the exception of Abu Dhabi 19's, Dolphin Energy and Qtel 14. Jafza and Dubai sovereign's were the front runners, seeing a 468 bps and a 125 bps yield expansion respectively. The flight to quality into the Qatari sovereigns continues, even when yields were looking a little tight yesterday. Interesting point to note, the Qatar 14's and 19's are offering yields that are tighter than before the current Dubai World issues. I would continue to have a positive view on these names, as they continue to tighten.
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