A window has opened in the sterling bond market for borrowers in the EEMEA region. At the end of 2006 two sterling bond deals were issued, one from the Middle East, the other from the CIS. Both were firsts, but Barclays Capital, the leading underwriter of sterling bonds, was nowhere to be seen on either occasion.
In December, Kazakhstan’s Bank TuranAlem issued a £200 million ($394 million) three-year deal. The bonds carried a coupon of 7.18% and were priced at 214 basis points over gilts.
The BTA deal followed hot on the heels of a £500 million five-year transaction from Abu Dhabi Commercial Bank in November. ADCB’s deal was priced at 70bp over the 4.25% March 2011 gilt. Demand for the paper was high, with more than £740 million of orders.
Barclays Capital, which is number one in the league table for international sterling bond issues, was absent from both deals. Royal Bank of Scotland and Bank of America were lead managers on the ADCB transaction, and Deutsche Bank was sole underwriter on the BTA deal.
“As a market leader in sterling we were very surprised by these choices as they are not natural sterling houses.