Maldives pays up to reach broader investor base

The Republic of Maldives reached a broad investor base for the first time, with a US$200m five-year Sukuk, but had to pay up compared to its previous deals.

SINGAPORE, Mar 30 (IFR) – The Republic of Maldives reached a broad investor base for the first time, with a US$200m five-year Sukuk, but had to pay up compared to its previous deals.

The issue was short of the benchmark size the Maldives had targeted, and could not tighten from initial guidance.

The US$200m 9.875% five-year offering priced at 97.616 to yield 10.5%.

Order statistics had yet to be released, but books were over US$370m, including US$104.5m from the leads, before final guidance was announced.

The Sukuk is expected to be rated B3 by Moody’s and will be issued off a US$1bn trust certificate issuance programme. Proceeds will fund a tender offer for the Maldives’ US$250m 7% bonds due June 7 2022 at par.

“We haven’t seen a lot of Sukuk this year,” said a DCM banker away from the deal. “We expected Pakistan to do a Sukuk, but they have decided to do a conventional bond.”

The United Kingdom is the only issuer from outside the Middle East to sell Sukuk so far this year, and that issue was denominated in sterling, for which there is little demand in Asia outside central banks.

Despite the rarity appeal of the Islamic structure, the Maldives, which is also rated CCC by Fitch, still paid a relatively hefty spread over other sovereigns with similar ratings. In the Asia Pacific, Mongolia, rated B3/B/B, had 2026 bonds yielding 3.6%, while Papua New Guinea, rated B2/B– (Moody’s/S&P), had 2028s seen around 8%.

Elsewhere Angola, rated Caa1/CCC (Moody’s/Fitch), had 2025s at 8% and Ghana, rated B3/B-/B, had 2026s at 6.4%.

The Islamic Corporation for the Development of the Private Sector (ICD) was the initially mandated lead arranger. Credit Suisse, Emirates NBD Capital, HSBC and ICD were joint global coordinators, lead managers and book runners.

The Maldives has two outstanding US dollar bond lines, but its previous issues appeared to be placed on a small group of investors. In May 2017 it priced a US$200m five-year bond at 7%, in a deal led by BoCom International, then tapped it for a further US$50m via the same arranger in November of that year.

In April 2018, it sold US$100m five-year bonds at 5.5% in a private placement. The bonds were sold to Abu Dhabi Fund for Development by arranger First Abu Dhabi Bank.

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