GCC Fixed Income 1H 2015 9 July 2015

1

GCC Fixed Income: 1H 2015 Chart book

9 July, 2015

2 2

To the fullest extent allowed by applicable laws and regulations, National Bank of Abu Dhabi PJSC (the “Bank”) and any other affiliate or subsidiary of the Bank, expressly disclaim all warranties and representations in respect of this communication. The content is confidential and is provided for your information purposes only on an “as is” and “as available” basis and no liability is accepted for or representation is made by the Bank in respect of the quality, completeness or accuracy of the information and the Bank has undertaken no independent verification in relation thereto nor is it under any duty to do so whether prepared in part or in full by the Bank or any third party. Furthermore, the Bank shall be under no obligation to provide you with any change or update in relation to said content. It is not intended for distribution to private investors or private clients and is not intended to be relied upon as advice; whether financial, legal, tax or otherwise. To the extent that you deem necessary to obtain such advice, you should consult with your independent advisors. Any content has been prepared by personnel of the Global Markets at the Bank and does not reflect the views of the Bank as a whole or other personnel of the Bank.

Disclaimer

3 3

Welcome to our 1H 2015 chart book for the GCC fixed income market. The idea is very simple – to give those of you who follow this market a quick snapshot of some of the key points in terms of the following:

Overview of spread performance in this market during the first half of 2015

Primary Market issuance (and performance of these deals since they were printed)

Secondary Market performance of key instruments (snapshot from 2nd January to 3rd July)

We have deliberately made the report text-light in an attempt to make it easier to digest. Hopefully you will find it both interesting and useful.

If you have any feedback on the report, or indeed would like to discuss any of the points highlighted, please do contact me.

Regards, Chavan Bhogaita Market Insights & Strategy Global Markets NBAD [email protected] +971 2 6110 127

Foreword

4 4

The GCC fixed income market has been relatively resilient during 1H’15 compared to EM and composite Investment Grade indices (chart #1). This market, which remains primarily dominated by UAE issuers, has also been far less volatile than the moves seen in 10-year US treasuries (chart #4).

Greece’s loan default on 30th June led to a spike in spreads, sending volatility to a record high. A ‘No’ vote to austerity by the Greek population on July 5 further complicated the situation. The looming risk of Grexit and a possible Fed hike later this year is keeping investors somewhat wary.

GCC spread performance summary – 1H’15

# 2: YTD CDS performance (bps change)

BUAEL – UAE Composite $ Bond Index;

BUSA – Investment Grade Composite $ Bond Index;

BEMI – Emerging Markets Inv Grade $ Bond Index

# 1: OAS spread (bps) rebased to 100 # 3: YTD CDS performance (bps change)

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

1/J

an

1/F

eb

1/M

ar

1/A

pr

1/M

ay

1/J

un

1/J

ul

10Y TY Yield BUAEUL Index Yield

TY

+31bps

BUAEL +6bps

TY +47bps

BUAEL +5bps

TY +27

BUAEL +17

Feb TY sell-off

May TY sell-off

Pre FOMC sell-off on rate liftoff

anticipation

T +27

B -1

-30-20-1001020

+9

-2

-5

-5

-22

-23 Japan

(Current CDS: 44)

Qatar (60)

Abu Dhabi (58)

Saudi Arabia (62)

South Korea (52)

China (95)

-40-30-20-100102030405060

+52

+37

+29

+21

+16

+15

-36 Dubai

(Current CDS: 191)

South Africa (205)

Indonesia (173)

Bahrain (263)

Malaysia (135)

Turkey (220)

Brazil (253)

# 4: 10yr Treasury yield vs BUAEUL yield

75

80

85

90

95

100

105

110

115

120

75

80

85

90

95

100

105

110

115

120

1/J

an

1/F

eb

1/M

ar

1/A

pr

1/M

ay

1/J

un

1/J

ul

BUAEUL Index BUSA Index BEMI Index

Source: Bloomberg; NBAD

5 5

GCC spread performance summary – 1H’15 Top 5 / bottom 5 bond/sukuk performers (z-spread, bps) in each category from 2nd Jan to 3rd July

Notes: (1) If the instrument is a "Sukuk", the ticker contains "(S)"; (2) All bonds/sukuks are $ denominated unless any other currency is highlighted in the ticker. (3) All bonds/sukuks are senior unsecured debt of the issuer unless an abbreviation for the debt type is highlighted in the ticker – e.g. – “Unsec” = Unsecured debt junior to Senior Unsecured debt; ; “Sub” = Subordinated; “Sr Sub” = Senior Subordinated; “Jr Sub” = Junior Subordinated; “Perp” = Perpetual; Callable, Puttable and Sinkable is highlighted by using “Call”, “Puta”, & “Sink” respectively; (4) * highlights spread change from the 1st settlement date of the bond as it was issued in 2015; ** Instrument/issuer with borderline IG ratings (BBB-/Baa3) or below are considered as Sub-inv grade for comparison purpose; Source: NBAD; Bloomberg

-50-40-30-20-10010203040

+30

+27

+22

+20

+12

-35

-40

-40

-40

-46

Sovereigns

QATAR 30

QATAR 40

DUGB 23 (S)

QATAR 42

DUGB 29 (S)

DUGB 17 (S)

RAKS 16 (S)

ADWA 20 SINK

ADGB 19

BHRAIN 18 (S) Unsec

-50-40-30-20-10010203040

+31

+17

+15

+13

+11

-25

-26

-27

-28

-44

Financials – Abu Dhabi & Qatar

QNBK 20

COMQAT 19 Sub

ALKHAL 18

QNBK 18

ADCBUH 23 Sub CALL

FGBUH 20 *24/2/15

NBADUH 20 *11/2/15

FGBUH 17 (S)

ADCBUH 20 *10/3/15

UNBUH 16

-150-125-100-75-50-250255075100

+38

+34

+31

+30

+29

-54

-66

-68

-71

-141

Financials – ex AD/Qatar

DIBUH 49 (S) Jr Sub PERP *20/1/15

DIBUH 49 (S) Jr Sub PERP

EBIUH 23 Sub CALL

AUBBI 49 Jr Sub PERP *29/4/15

EBIUH 49 Jr Sub PERP

GULF 17

GULINT 17

HSBC 16 (S)

RAKBNK 19

EBIUH 22 € *23/3/15

-50-40-30-20-10010203040

+39

+25

+25

+24

+22

-26

-27

-27

-36

-49

Inv. Grade Corporates – Abu Dhabi

INTPET 26 £

INTPET 41

INTPET 23 €

DOLNRG 21 Sec

INTPET 16 €

TAQAUH 18

MUBAUH 19

TAQAUH 6.165 17

TAQAUH 4.125 17

MUBAUH 16

-50-40-30-20-10010203040

+29

+17

+7

+7

+7

-22

-23

-34

-39

-45

Inv. Grade Corporates – ex Abu Dhabi

EMIRAT 23 (S) SINK

KWIPKK 20

QTELQD 43

MAFUAE 24

QTELQD 16

SABIC 18

MAFUAE 17 (S)

DPWDU 20 *18/5/15

OMGRID 25 *7/5/15

DEWAAE 18 (S)

-150-125-100-75-50-250255075100

+26

-1

-6

-9

-12

-42

-80

-107

-113

-137

GCC Corporates – Sub investment grade

DARALA 16 (S)

DUBAIH 17 £

DARALA 18 (S)

DARALA 19 (S)

FLYDU 19 (S)

JAFZSK 19 (S)

EMAAR 19 (S)

EMAAR 16 (S)

NAKHL 16 Dh (S)

ALDAR 18 (S)

6 6

0% 25% 50% 75% 100%

63%

22%

39%

55%

44%

50%

40%

70%

43%

33%

76%

23%

5%

25%

21%

10%

14%

8%

15%

17%

3%

14%

41%

32%

20%

33%

40%

46%

22%

40%

46%

19%

32%

29%

2%

2%

4%

2%

MENA Asia Europe & UK Others

BOSUH 3.374% 20

NBADUH 5.25% T1 NC5

NBK 5.75 49 AT1 NC6

BBK 3.5 20

NBADUH 2.25 20

ETISLT 2.375% 19 Tap

BKDBOM 6.85% T1 NC5

EMIRAT (KHDRWY) 2.471% 25 (S)

2.3x

2.4x

2.5x

2.8x

3.5x

7.2x

3.6x

6.0x

Times oversubscribed

RAKS 3.094 25 (S)

DPWDU 3.286% 20

SIBUH 2.843 20 (S)

2.0x

2.0x

2.0x

GCC bond & sukuk issuance

For the above analysis we have considered the major hard currency deals done by GCC entities – $/€/£/A$ bonds/sukuks above $100m in issue amount and maturity of one year or more. The deals include both fixed & floating rate issuances.

Observation: Approximately US$ 16bn of new issues came from the GCC issuers during the first half of the year which was circa 50% of the total issuance we have seen in 2014. The last deal was a $750m perpetual issue from NBAD before the month of Ramadan. Amid a volatile backdrop for global markets, demand for GCC primary issues was relatively robust as deals were well absorbed by the market as shown by the chart above. Some deals such as Sharjah Islamic Bank’s 5-year sukuk and DP World’s 5-year bonds were extremely well received with orderbooks oversubscribed by 7x and 6x, respectively.

Issuers from the region may look for some more opportunistic funding during the second half of 2015 as circa $8.5bn of paper is due for maturity by year end and another $4.5bn due in 1H 2016. Furthermore, issuers may seek to lock in funding at low rates before the Fed hikes.

Demand from investors remains strong Total issuance (yearly comparison)


0 4 8 12 16 20 24 28 32

2010

2011

2012

2013

2014

2015 YTD

23.2

21.1

18.2

18.4

18.5

9.9

2.4

4.8

14.1

11.4

13.7

5.7

25.6

25.9

32.2

29.8

32.2

15.6

Issuance in $ bn

Conventional bond Sukuk No. of deals (Bond/Sukuk)

27 (20/7)

52 (33/19)

46 (30/16)

45 (27/18)

33 (23/10)

29 (25/4)

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Major primary deals from the GCC in 2015 – YTD summary

Issue Entity of Credit Risk Entity Type

Domain Bond / Sukuk

Moody's / S&P bond

rating Size (mn) Tenor

Pricing date

Priced (bps)

Spread on 03-Jul-15

Spread change

DIBUH 6.75 49 (S) Jr Sub PERP

Dubai Islamic Bank Fin Dubai S NR / NR $1000 Perpetual 14-Jan-15 MS+512.6 376.0 -136.6

HSBC Flt 17 HSBC Bank Middle East Fin Dubai B NR / NR $274 2-yr 30-Jan-15 71(Y) 24.4 -46.6

NBADUH 2.25 20 National Bank of Abu Dhabi Fin Abu Dhabi B Aa3 / AA- $750 5-yr 04-Feb-15 MS+85 72.3 -12.7

EBIUH 4.75 22 A$ Emirates NBD Fin Dubai B Baa1 / NR A$450 7-yr 11-Feb-15 T+252 204.6 -47.4

FGBUH 2.625 20 First Gulf Bank Fin Abu Dhabi B A2 / NR $750 5-yr 17-Feb-15 MS+100 100.4 +0.4

HSBC Flt 18 HSBC Bank Middle East Fin Dubai B NR / NR $350 3-yr 23-Feb-15 87.9(Y) 37.0 -50.9

RAKBNK 3.25 19 Tap

National Bank of Ras Khaimah

Fin Ral Al

Khaimah B Baa1 / NR $300 4-yr 23-Feb-15 303.1(Y) 308.1 +5.1

ADCBUH 2.625 20 Abu Dhabi Commercial Bank Fin Abu Dhabi B NR / A $750 5-yr 03-Mar-15 MS+97.5 98.6 +1.1

ISDB 1.831 20 (S) Islamic Development Bank Fin Saudi Arabia S Aaa / NR $1000 5-yr 05-Mar-15 MS+8 21.2 +13.2

SIB 2.843 20 (S) Sharjah Islamic bank Fin Sharjah S A3 / NR $500 5-yr 10-Mar-15 284.3(Y) 273.0 -11.3

BBK 3.5 20 Bank of Bahrain & Kuwait Fin Bahrain B Baa3 / NR $400 5-yr 10-Mar-15 MS+200 213.6 +13.6

EBIUH 1.75 22 € Emirates NBD Fin Dubai B Baa1 / NR €550 7-yr 16-Mar-15 MS+135 181.5 +46.5

RAKS 3.094 25 (S) Govt. of Ras Al Khaimah Sov Ral Al

Khaimah S NR / NR $1000 10-yr 24-Mar-15 MS+110 89.2 -20.8


8 8

Major primary deals from the GCC in 2015 – YTD summary

Issue Entity of Credit Risk Entity Type

Domain Bond / Sukuk

Moody's / S&P bond

rating Size (mn) Tenor

Pricing date

Priced (bps)

Spread on 03-Jul-15

Spread change

KHDRWY 2.471 25 (S) SINK

Emirates Airline (UK’s ECGD guaranteed)

Corps Dubai S NR / NR $913 10-yr 24-Mar-15 MS+90 72.6 -17.4

NTBKKK 5.75 49 Jr Sub PERP

National bank of Kuwait Fin Kuwait B Baa3 / NR $700 Perpetual 01-Apr-15 MS+411.9 340.3 -71.6

QNBK Flt 16 € Qatar National Bank Fin Qatar B NR / NR €125 1-yr 14-Apr-15 12.1(Y) 66.7 +54.6

NOORBK 2.788 20 (S)

Noor Bank Fin Dubai S NR / NR $500 5-yr 21-Apr-15 MS+130 129.0 -1.0

AUBBI 6.875 49 Jr Sub PERP

Ahli United Bank Fin Bahrain B NR / NR $400 Perpetual 22-Apr-15 MS+538.7 421.9 -116.8

ETISLT 2.375% 19 Tap

Emirates Telecommunications Corp.

Corp Abu Dhabi B Aa3 / AA- $400 4-yr 28-Apr-15 209.3 (Y) 221.2 +11.9

OMGRID 3.958 25 Oman Electricity Corps Oman B A3 / BBB+ $1000 10-yr 29-Apr-15 T+190 187.5 -2.5

EBIUH 3 20 Emirates NBD Fin Dubai B Baa1 / NR $350 5-yr 29-Apr-15 MS+150 125.7 -24.3

DPWDU 3.25 20 DP World Ltd Corps Dubai B Baa3 / NR $500 5-yr 12-May-15 MS+155 151.7 -3.3

DIBUH 2.921 20 (S) Dubai Islamic Bank Fin Dubai S Baa1 / NR $750 5-yr 18-May-15 MS+125 123.5 -1.5

BKDBOM 6.85 49 Jr Sub PERP

Bank Dhofar SAOG Fin Oman B NR / NR $300 Perpetual 19-May-15 685(Y) 669.7 -15.3

BOSUH 3.374 20 Bank of Sharjah Fin Sharjah B NR / NR $500 5-yr 01-Jun-15 MS+175 179.8 +4.8

HSBC Flt 17 £ HSBC Bank Middle East Fin Dubai B NR / NR £251 2-yr 04-Jun-15 74.2(Y) 100.2 +26.0

NBADUH 5.25 49 Jr Sub PERP

National Bank of Abu Dhabi Fin Abu Dhabi B Baa3 / BBB- $750 Perpetual 10-Jun-15 MS+335 306.3 -28.7


9 9

2015 GCC primary deals - performance in the secondary market since issue (spread change over pricing benchmark & price change since issue date)

Note: (1) If the instrument is a "Sukuk", the ticker contains "(S)" next to the maturity year; The bracketed abbreviation on the end of the tickers refer to the pricing benchmarks on which the spread is indicative – e.g. (M) stands for “Mid swap”; (T) stands for “Treasury”; (Y) stands for “Yield”; All bonds/sukuks are $ denominated unless any other currency is highlighted in the ticker. (3) All bonds/sukuks are senior unsecured debt of the issuer unless an abbreviation for the debt type is highlighted in the ticker – e.g – “Unsec” = Unsecured debt; “Sub” = Subordinated; “Sr Sub” = Senior Subordinated; “Jr Sub” = Junior Subordinated; “Perp” = Perpetual; We have also highlighted the Callable, Puttable and Sinkable nature of the bond, if it is, by using “Call”, “Puta”, & “Sink” respectively; Source: NBAD; Bloomberg

Spread change (in bps) Cash price change

-150 -125 -100 -75 -50 -25 0 25 50

-29

+5

-15

-2

-3

-3

-24

+12

-117

-1

-72

-21

-17

+47

-11

+14

+13

+1

+5

unch

-47

-13

-137

-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0

+1.8

-1.0

+0.4

-0.4

+0.1

-2.3

+0.5

-0.5

+3.8

-1.1

+1.9

-2.0

-0.3

-5.1

+0.1

-0.6

-0.2

+0.3

-0.2

+0.1

+2.7

-0.3

+5.3 DIBUH 6.75 49 (S) Jr Sub PERP (14-Jan)

NBADUH 2.25 20 (04-Feb)

EBIUH 4.75 22 A$ (11-Feb)

FGBUH 2.625 20 (17-Feb)

ADCBUH 2.625 20 (03-Mar)

ISDB 1.831 20 (S) (05-Mar)

SIB 2.843 20 (S) (10-Mar)

BBK 3.5 20 (10-Mar)

EBIUH 1.75 22 € (16-Mar)

RAKS 3.094 25 (S) (24-Mar)

KHDRWY 2.471 25 (S) SINK (24-Mar)

ETISLT 2.375% 19 Tap (28-Apr)

NTBKKK 5.75 49 Jr Sub PERP (01-Apr)

NOORBK 2.788 20 (S) (21-Apr)

AUBBI 6.875 49 Jr Sub PERP (22-Apr)

OMGRID 3.958 25 (29-Apr)

EBIUH 3 20 (29-Apr)

DPWDU 3.25 20 (12-May)

DIBUH 2.921 20 (S) (18-May)

BKDBOM 6.85 49 Jr Sub PERP (19-May)

BOSUH 3.374 20 (01-Jun)

NBADUH 5.25 49 Jr Sub PERP (10-Jun)

RAKBNK 3.25 19 Tap (23-Feb)

Bond/Sukuk (Issue date)

10 10

QA

TA

R 1

7 Q

AT

AR

18 (

S)

QA

TA

R 1

9 QA

TA

R 2

0

QA

TD

IA 2

0

QA

TA

R 2

2

QA

TA

R 2

3 (

S)

QA

TA

R 3

0

QA

TA

R 4

0

QA

TA

R 4

2

unch

-9

+3

-15

-24

-29

-30

-46

-40 -40

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

170

180

190

200

z-sp

read

(b

ps)

Maturity

03-Jul 02-Jan

Long term

Short term

Notes: (1) All bonds/sukuks are $ denominated; (2) If the instrument is a "Sukuk", the ticker contains "(S)" next to the maturity year; (3) ** Included QATDIA in Qatar Sov curve as it is explicitly Govt guaranteed; Source: NBAD

Curve on 02-Jan Curve on 03-Jul

Sovereigns spread performance – Qatar

Qatar sovereign curve flattened during 1H on lack of supply and the move was more pronounced towards the long-end of the curve.

11 11

DU

GB

17 (

S)

DU

GB

20

DU

GB

21 P

UT

A

DU

GB

22 (

S)

DU

GB

23 (

S)

DU

GB

29 (

S)

DU

GB

43

BH

RA

IN 1

8 (

S)

Unsec

BH

RA

IN 2

0

MU

MT

AK

21 (

S)

BH

RA

IN 2

2

BH

RA

IN 2

3

BH

RA

IN 4

4 U

nsec

RA

KS

16 (

S)

RA

KS

18 (

S)

RA

KS

25 (

S)

*3

1/3

/15

+12

-20 -21

-21 -40

-35

-2

+30

-33 +10

-31

-31

-12

+20

-4

-23

0

25

50

75

100

125

150

175

200

225

250

275

300

325

350

375

400

z-sp

read

(b

ps)

Maturity

Long term

Short term

Notes: (1) If the instrument is a "Sukuk", the ticker contains "(S)"; (2) All bonds/sukuks are $ denominated unless any other currency is highlighted in the ticker. (3) All bonds/sukuks are senior unsecured debt of the issuer unless an abbreviation for the debt type is highlighted in the ticker – e.g – “Unsec” = Unsecured debt; “Sub” = Subordinated; “Sr Sub” = Senior Subordinated; “Jr Sub” = Junior Subordinated; “Perp” = Perpetual; We have also highlighted the Callable, Puttable and Sinkable nature of the bond, if it is, by using “Call”, “Puta”, & “Sink” respectively; (4) * highlights spread change from the 1st settlement date of the bond as it was issued in 2015; Source: NBAD; Bloomberg

03-Jul 02-Jan DUGB BAHRAIN Curve on 02-Jan Curve on 03-Jul RAK

Sovereigns spread performance – Dubai, Bahrain & RAK

Interestingly Bahrain curve flattened significantly during Q2 as the curve was trading wide during Q1 on concerns of low oil price which triggered a rating downgrade from S&P in February (to BBB- from BBB with negative outlook).

Indeed Moody’s also downgraded the sovereign by one notch in April to Baa3 and assigned a negative outlook citing same concerns. However, market seems to be comfortable with the credit risk as spreads have tightened during Q2.

12 12


SIB

16

(S)

FGB

UH

16

(S)

UN

BU

H 1

6

AD

CB

UH

16

(S)

AD

IBU

H 1

6 (

S) AD

CB

UH

17

FGB

UH

17

(S)

EIB

UH

17

(S)

TAM

WEE

17

(S)

NB

AD

UH

17

EBIU

H 1

7

DIB

UH

17

(S)

FGB

UH

17

EIB

UH

18

(S)

AD

CB

UH

18

SIB

18

(S)

CB

DU

H 1

8

ALH

ILA

18

(S)

FGB

UH

19

AD

CB

UH

19

RA

KB

NK

19

NB

AD

UH

19

EBIU

H 1

9

NB

AD

UH

20

*1

1/2

/15

FGB

UH

20

*2

4/2

/15

AD

CB

UH

20

*1

0/3

/15

SIB

20

(S)

*1

7/3

/15

NO

OR

BK

20

(S)

*2

8/4

/15

EBIU

H 2

0

*6/5

/15

DIB

UH

20

(S)

*3

/6/1

5

BO

SUH

20

*8

/6/1

5

EBIU

H 2

2 €

*2

3/3

/15

+6

-6

+31

+6

+9

-22

+15

+1

-9

+8

-20

-18

+4

-9

-6 +22

-36

+7

-1

+34

unch

-5

+2

+13

+11

+17

+5

+12

-12

+13

+21

+38

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

170

180

190

200

210

z-sp

read

(b

ps)

Maturity Long term

Short term

03-Jul 02-Jan

UAE financials spread performance

13 13

GCC financials spread performance (ex UAE)


HSB

C 1

6 (

S)

QN

BK

16

QN

BK

17

DH

BK

QD

17

CO

MQ

AT

17

BSF

R 1

7 (

S)

QIB

KQ

D 1

7 (

S)

QII

K 1

7 (

S)

GU

LF 1

7

GU

LIN

T 1

7

QN

BK

18

QN

BK

2.1

25

18

ALK

HA

L 1

8

QN

BK

18

QN

BK

2.7

5 1

8

HSB

C 1

9

NB

OB

OM

19

BB

K 2

0

*24

/3/1

5

QN

BK

20

+31

-7

-10

unch

-6

+3 -12

-13

+29

+30

-15

+25

-27

-15 -24

unch

-19

+1

-44

0

15

30

45

60

75

90

105

120

135

150

165

180

195

210

225

z-sp

read

(b

ps)

Maturity Long term

Short term

03-Jul 02-Jan

14 14

GCC financials spread performance (Subordinated bonds)


AD

IBU

H 4

9 (

S) J

r Su

b P

ERP

DIB

UH

49

(S)

Jr

Sub

PER

P

EBIU

H 4

9 J

r Su

b P

ERP

ALH

ILA

49

(S)

Jr

Sub

PER

P

CO

MQ

AT

19

Su

b

AU

BB

I 49

Jr

Sub

PER

P *

29

/4/1

5

BK

DB

OM

49

Jr

Sub

PER

P *

27

/5/1

5

NB

AD

UH

49

Jr

Sub

PER

P *

17

/6/1

5

EBIU

H 4

9 S

ub

PER

P

DIB

UH

49

(S)

Jr

Sub

PER

P *

20

/1/1

5

NTB

KK

K 4

9 J

r Su

b P

ERP

*9

/4/1

5

AD

CB

UH

23

Su

b EB

IUH

23

Su

b C

ALL

AD

CB

UH

23

Su

b C

ALL

-22

-71

-54

-5

-28

-66

-12

-20

-42 -141

-31

-23

-68

-25

100

125

150

175

200

225

250

275

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325

350

375

400

425

450

475

500

525

550

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(b

ps)

Maturity date / First Call Date for Perpetuals Long term

Short term

03-Jul 02-Jan

Perpetual bonds continued to be in demand from investors, witnessing significant spread tightening in first six months of the year. Indeed they have outperformed in both spread terms and cash price basis.

15 15


MU

BA

UH

16

MU

BA

UH

19

DO

LNR

G 1

9 S

ec S

INK

ETIS

LT 1

9

MU

BA

UH

21

ETIS

LT 2

1 €

DO

LNR

G 2

1 S

ec

MU

BA

UH

22

ETIS

LT 2

4

ETIS

LT 2

6 €

+39

+24

+1

+13

-10 +2

-27

-9

-2

-25

10

20

30

40

50

60

70

80

90

100

110

120

130

140

z-sp

read

(b

ps)

Maturity Long term

Short term

03-Jul 02-Jan

Abu Dhabi corporates spread performance (Inv. grade – ex Ipic & Taqa)

16 16

Abu Dhabi corporates spread performance (Inv. grade – Ipic curve)


INT

PE

T 1

6 €

INT

PE

T 1

7

INT

PE

T 1

8 €

INT

PE

T 2

0

INT

PE

T 2

1 €

INT

PE

T 2

2

INT

PE

T 2

3 €

INT

PE

T 2

6 £

INT

PE

T 4

1

-26

-1 -19

-10

-9

unch

-27

-49

-36

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

170

180

190

200

210

z-sp

read

(b

ps)

Maturity Long term

Short term

03-Jul 02-Jan Curve on 02-Jan Curve on 03-Jul

The Euro and GBP papers in particular performed very well relative to the curve which overall flattened during the first six months of 2015.

17 17

TA

QA

UH

16

TA

QA

UH

4.1

25 1

7

TA

QA

UH

6.1

65 1

7

TA

QA

UH

18

TA

QA

UH

18

TA

QA

UH

19

TA

QA

UH

21

TA

QA

UH

23

TA

QA

UH

24

RP

CU

H 3

6 S

ec S

INK

TA

QA

UH

36

-2

+25

+25

+22 +15 +7

-13

+13 +13

-15 unch

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

170

180

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200

210

220

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read

(b

ps)

Maturity


Long term

Short term

03-Jul 02-Jan Curve on 02-Jan Curve on 03-Jul

Abu Dhabi corporates spread performance (Inv. grade – Taqa curve)

TAQA curve underperformed relative to other IG credits as the company’s operations are directly exposed to oil prices and Moody’s recently lowered its baseline credit assessment rating for TAQA to b2 from ba2. However, Moody’s affirmed TAQA’s main credit rating at A3 with a stable outlook.

18 18

RA

SG

AS

19 S

ec

QT

ELQ

D 1

6

QT

ELQ

D 1

8 (

S)

QT

ELQ

D 1

9

QT

ELQ

D 2

1

QT

ELQ

D 2

3

QT

ELQ

D 2

5

QT

ELQ

D 2

8

QT

ELQ

D 4

3

-21

-22

-5 -17

-17

-6

-15

-16

-34

20

40

60

80

100

120

140

160

180

200

220

z-sp

read

(b

ps)

Maturity

Notes: (1) If the instrument is a "Sukuk", the ticker contains "(S)"; (2) All bonds/sukuks are $ denominated unless any other currency is highlighted in the ticker. (3) All bonds/sukuks are senior unsecured debt of the issuer unless an abbreviation for the debt type is highlighted in the ticker – e.g – “Unsec” = Unsecured debt Sub” = Subordinated; “Sr Sub” = Senior Subordinated; “Jr Sub” = Junior Subordinated; “Perp” = Perpetual; We have also highlighted the Callable, Puttable and Sinkable nature of the bond, if it is, by using “Call”, “Puta”, & “Sink” respectively; (4) * highlights spread change from the 1st settlement date of the bond as it was issued in 2015; Source: NBAD; Bloomberg

Long term

Short term

03-Jul 02-Jan RASGAS QTEL Curve on 02-Jan Curve on 03-Jul

Qatar corporates spread performance (Inv. grade)

Spreads for Qatari corporate paper tightened across the curve. There has been no additional supply from this sector and hence investors wishing to take exposure have to look at these blue chip credits that do have some paper in the market.

19 19


EMIR

AT

16

KW

IPK

K 1

6

DEW

AA

E 1

6 M

AFU

AE

17

(S)

SEC

O 1

7 (

S)

DP

WD

U 1

7 (

S)

DEW

AA

E 1

8 (

S)

SAB

IC 1

8

KW

IPK

K 1

9

DP

WD

U 2

0

*18

/5/1

5

INV

CO

R 2

0 (

S) K

WIP

KK

20

DEW

AA

E 2

0

SAB

IC 2

0 €

SEC

O 2

2 (

S)

EMIR

AT

23

(S)

SIN

K

SEC

O 2

3 (

S)

SEC

O 2

4 (

S)

MA

FUA

E 2

4

INV

CO

R 2

4

EMA

AR

M 2

4 (

S)

EMIR

AT

25

SIN

K

KH

DR

WY

25

(S)

SIN

K *

31

/3/1

5

OM

GR

ID 2

5

*7/5

/15

DP

WD

U 3

7

SEC

O 4

3 (

S)

SEC

O 4

4 (

S)

MA

FUA

E 4

9 S

ub

PER

P

+3

-11

-8

+7

-15

-12

+29 +7

+4

+7

-16 -39

-18

-1

-11

-45

-9 -15

-23

-

-17

-8

-20

+17

+2

-11

-3

-14

25

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125

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225

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(b

ps)

Maturity Long term

Short term

03-Jul 02-Jan

GCC Corporates spread performance (Inv. grade – ex Abu Dhabi & Qatar)

The 5 to 10 year space performed well relative to the shorter and longer dated bonds.

20 20

GCC Corporates spread performance (Sub investment grade*)

Notes: (1) If the instrument is a "Sukuk", the ticker contains "(S)"; (2) All bonds/sukuks are $ denominated unless any other currency is highlighted in the ticker. (3) All bonds/sukuks are senior unsecured debt of the issuer unless an abbreviation for the debt type is highlighted in the ticker – e.g – “Unsec” = Unsecured debt; “Sub” = Subordinated; “Sr Sub” = Senior Subordinated; “Jr Sub” = Junior Subordinated; “Perp” = Perpetual; We have also highlighted the Callable, Puttable and Sinkable nature of the bond, if it is, by using “Call”, “Puta”, & “Sink” respectively; (4) * Instrument/issuer with borderline IG ratings (BBB-/Baa3) or below are considered as Sub-inv grade for comparison purpose; Source: NBAD; Bloomberg

EM

AA

R 1

6 (

S)

NA

KH

L 1

6 D

h (

S)

DA

RA

LA

16 (

S)

DU

BA

IH 1

7 £

DA

RA

LA

18 (

S)

GM

SE

DU

49 (

S)

Jr

Sub P

ER

P

ALD

AR

18 (

S)

DIC

UH

19 (

S)

DA

MA

CR

19 (

S)

DA

RA

LA

19 (

S)

JA

FZ

SK

19 (

S)

EM

AA

R 1

9 (

S)

FL

YD

U 1

9 (

S)

BA

TE

LC

20

DIF

CA

E 2

4 (

S)

-1

+26

-137

-113

-107

-22

-6

-19

-40

-80

-12

-9

-42

-38

-18

25

50

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100

125

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575

600

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read

(b

ps)

Maturity Long term

Short term

03-Jul 02-Jan

The sub investment grade papers performed relatively well with Dar Al Arkan being the outperformer. Nakheel sukuk was the only laggard, probably more on the account of a recent report from S&P saying Dubai real estate sector may see a price correction of around 20% in 2015.

21 21

Rakesh Sahu / Chavan Bhogaita Market Insights & Strategy Global Markets National Bank of Abu Dhabi Tel: +971 2 6110 127 [email protected]

Contact

GCC Fixed Income 1H 2015 9 July 2015

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Transcript of GCC Fixed Income 1H 2015 9 July 2015