GCC Fixed Income: 1H 2015 Chart book. 9 July, 2015

Transcription

1 GCC Fixed Income: 1H 15 Chart book 9 July, 15 1

2 Disclaimer 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. 2 2

3 Foreword Welcome to our 1H 15 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 s of the following: Overview of spread performance in this market during the first half of 15 Primary Market issuance (and performance of these deals since they were printed) Secondary Market performance of key instruments (snapshot from 2 nd January to 3 rd 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 Chavan.bhogaita@nbad.com

4 1/Jan 1/Feb 1/Mar 1/Apr 1/May 1/Jun 1/Jul 1/Jan 1/Feb 1/Mar 1/Apr 1/May 1/Jun 1/Jul GCC spread performance summary 1H 15 # 1: OAS spread (bps) rebased to # 2: YTD CDS performance (bps change) # 3: YTD CDS performance (bps change) Japan (Current CDS: 44) Qatar (6) Abu Dhabi (58) Saudi Arabia (62) South Korea (52) Dubai (Current CDS: 191) South Africa (5) Indonesia (173) Bahrain (263) Malaysia (135) Turkey (2) +9 China (95) +52 Brazil (253) BUAEUL Index BUSA Index BEMI Index Feb TY sell-off TY +47bps BUAEL +5bps # 4: 1yr Treasury yield vs BUAEUL yield May TY sell-off TY +31bps BUAEL +6bps TY +27 BUAEL +17 Pre FOMC sell-off on rate liftoff anticipation T +27 B 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 1-year US treasuries (chart #4). Greece s loan default on 3th 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 BUAEL UAE Composite $ Bond Index; 1Y TY Yield BUAEUL Index Yield BUSA Investment Grade Composite $ Bond Index; BEMI Emerging Markets Inv Grade $ Bond Index 4 4 Source: Bloomberg; NBAD

5 GCC spread performance summary 1H 15 Top 5 / bottom 5 bond/sukuk performers (z-spread, bps) in each category from 2 nd Jan to 3 rd July Sovereigns Financials Abu Dhabi & Qatar Financials ex AD/Qatar QATAR 3-46 QNBK -44 DIBUH 49 (S) Jr Sub PERP */1/ QATAR 4-4 COMQAT 19 Sub -28 DIBUH 49 (S) Jr Sub PERP -71 DUGB 23 (S) QATAR 42 DUGB 29 (S) ALKHAL 18 QNBK 18 ADCBUH 23 Sub CALL EBIUH 23 Sub CALL AUBBI 49 Jr Sub PERP *29/4/15 EBIUH 49 Jr Sub PERP DUGB 17 (S) +11 FGBUH *24/2/ GULF 17 + RAKS 16 (S) +13 NBADUH *11/2/15 +3 GULINT ADWA SINK +15 FGBUH 17 (S) +31 HSBC 16 (S) +27 ADGB ADCBUH *1/3/ RAKBNK BHRAIN 18 (S) Unsec +31 UNBUH EBIUH 22 *23/3/ Inv. Grade Corporates Abu Dhabi Inv. Grade Corporates ex Abu Dhabi GCC Corporates Sub investment grade INTPET EMIRAT 23 (S) SINK -45 DARALA 16 (S) -137 INTPET KWIPKK -39 DUBAIH INTPET QTELQD DARALA 18 (S) -17 DOLNRG 21 Sec -27 MAFUAE DARALA 19 (S) -8 INTPET QTELQD FLYDU 19 (S) TAQAUH SABIC 18 JAFZSK 19 (S) MUBAUH MAFUAE 17 (S) EMAAR 19 (S) TAQAUH DPWDU *18/5/15 ALDAR 18 (S) TAQAUH OMGRID 25 *7/5/15 EMAAR 16 (S) MUBAUH DEWAAE 18 (S) +26 NAKHL 16 Dh (S) 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 15; ** Instrument/issuer with borderline IG ratings (BBB-/Baa3) or below are considered as Sub-inv grade for comparison purpose; Source: NBAD; Bloomberg 5 5

6 GCC bond & sukuk issuance Total issuance (yearly comparison) Demand from investors remains strong 15 YTD (/7) BOSUH 3.374% NBADUH 5.25% T1 NC5 33% 76% 17% 46% 3% 19% 2% 4% 2.x 2.x (33/19) NBK AT1 NC6 43% 15% 4% 2% 2.x (3/16) BBK 3.5 NBADUH % 7% 14% 8% 46% 22% 2.3x 2.4x (27/18) ETISLT 2.375% 19 Tap 5% 1% 4% 2.5x (23/1) 29 (25/4) Issuance in $ bn Conventional bond Sukuk No. of deals (Bond/Sukuk) BKDBOM 6.85% T1 NC5 RAKS (S) EMIRAT (KHDRWY) 2.471% 25 (S) DPWDU 3.286% SIBUH (S) 22% 44% 39% 55% 5% 63% 41% 21% 32% 25% 23% 33% 29% 32% % 14% % 25% 5% 75% % MENA Asia Europe & UK Others 2% Times oversubscribed 2.8x 3.5x 3.6x 6.x 7.2x Source: Bloomberg; NBAD For the above analysis we have considered the major hard currency deals done by GCC entities $/ / /A$ bonds/sukuks above $m in issue amount and maturity of one year or more. The deals include both fixed & floating rate issuances. Observation: Approximately US$ 16bn of new issues came from the GCC issuers during the first half of the year which was circa 5% of the total issuance we have seen in 14. The last deal was a $75m 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 15 as circa $8.5bn of paper is due for maturity by year end and another $4.5bn due in 1H 16. Furthermore, issuers may seek to lock in funding at low rates before the Fed hikes. 6 6

7 Major primary deals from the GCC in 15 YTD summary Issue DIBUH (S) Jr Sub PERP Entity of Credit Risk Entity Type Domain Bond / Sukuk Moody's / S&P bond Size (mn) rating Tenor Pricing date Priced (bps) Spread on 3-Jul-15 Spread change Dubai Islamic Bank Fin Dubai S NR / NR $ Perpetual 14-Jan-15 MS HSBC Flt 17 HSBC Bank Middle East Fin Dubai B NR / NR $274 2-yr 3-Jan-15 71(Y) NBADUH 2.25 National Bank of Abu Dhabi Fin Abu Dhabi B Aa3 / AA- $75 5-yr 4-Feb-15 MS EBIUH A$ Emirates NBD Fin Dubai B Baa1 / NR A$45 7-yr 11-Feb-15 T FGBUH First Gulf Bank Fin Abu Dhabi B A2 / NR $75 5-yr 17-Feb-15 MS HSBC Flt 18 HSBC Bank Middle East Fin Dubai B NR / NR $35 3-yr 23-Feb (Y) RAKBNK Tap National Bank of Ras Khaimah Fin Ral Al Khaimah B Baa1 / NR $3 4-yr 23-Feb (Y) ADCBUH Abu Dhabi Commercial Bank Fin Abu Dhabi B NR / A $75 5-yr 3-Mar-15 MS ISDB (S) Islamic Development Bank Fin Saudi Arabia S Aaa / NR $ 5-yr 5-Mar-15 MS SIB (S) Sharjah Islamic bank Fin Sharjah S A3 / NR $5 5-yr 1-Mar (Y) BBK 3.5 Bank of Bahrain & Kuwait Fin Bahrain B Baa3 / NR $4 5-yr 1-Mar-15 MS EBIUH Emirates NBD Fin Dubai B Baa1 / NR 55 7-yr 16-Mar-15 MS RAKS (S) Govt. of Ras Al Khaimah Sov Ral Al Khaimah S NR / NR $ 1-yr 24-Mar-15 MS Source: Bloomberg; NBAD 7 7

8 Major primary deals from the GCC in 15 YTD summary Issue KHDRWY (S) SINK NTBKKK Jr Sub PERP Entity of Credit Risk Emirates Airline (UK s ECGD guaranteed) Entity Type Domain Bond / Sukuk Moody's / S&P bond Size (mn) rating Tenor Pricing date Priced (bps) Spread on 3-Jul-15 Spread change Corps Dubai S NR / NR $913 1-yr 24-Mar-15 MS National bank of Kuwait Fin Kuwait B Baa3 / NR $7 Perpetual 1-Apr-15 MS QNBK Flt 16 Qatar National Bank Fin Qatar B NR / NR yr 14-Apr (Y) NOORBK (S) AUBBI Jr Sub PERP ETISLT 2.375% 19 Tap Noor Bank Fin Dubai S NR / NR $5 5-yr 21-Apr-15 MS Ahli United Bank Fin Bahrain B NR / NR $4 Perpetual 22-Apr-15 MS Emirates Telecommunications Corp. Corp Abu Dhabi B Aa3 / AA- $4 4-yr 28-Apr (Y) OMGRID Oman Electricity Corps Oman B A3 / BBB+ $ 1-yr 29-Apr-15 T EBIUH 3 Emirates NBD Fin Dubai B Baa1 / NR $35 5-yr 29-Apr-15 MS DPWDU 3.25 DP World Ltd Corps Dubai B Baa3 / NR $5 5-yr 12-May-15 MS DIBUH (S) Dubai Islamic Bank Fin Dubai S Baa1 / NR $75 5-yr 18-May-15 MS BKDBOM Jr Sub PERP Bank Dhofar SAOG Fin Oman B NR / NR $3 Perpetual 19-May (Y) BOSUH Bank of Sharjah Fin Sharjah B NR / NR $5 5-yr 1-Jun-15 MS HSBC Flt 17 HSBC Bank Middle East Fin Dubai B NR / NR yr 4-Jun (Y) NBADUH Jr Sub PERP National Bank of Abu Dhabi Fin Abu Dhabi B Baa3 / BBB- $75 Perpetual 1-Jun-15 MS Source: Bloomberg; NBAD 8 8

9 15 GCC primary deals - performance in the secondary market since issue (spread change over pricing benchmark & price change since issue date) Spread change (in bps) Bond/Sukuk (Issue date) Cash price change unch DIBUH (S) Jr Sub PERP (14-Jan) NBADUH 2.25 (4-Feb) EBIUH A$ (11-Feb) FGBUH (17-Feb) RAKBNK Tap (23-Feb) ADCBUH (3-Mar) ISDB (S) (5-Mar) SIB (S) (1-Mar) BBK 3.5 (1-Mar) EBIUH (16-Mar) RAKS (S) (24-Mar) KHDRWY (S) SINK (24-Mar) NTBKKK Jr Sub PERP (1-Apr) NOORBK (S) (21-Apr) AUBBI Jr Sub PERP (22-Apr) ETISLT 2.375% 19 Tap (28-Apr) OMGRID (29-Apr) EBIUH 3 (29-Apr) DPWDU 3.25 (12-May) DIBUH (S) (18-May) BKDBOM Jr Sub PERP (19-May) BOSUH (1-Jun) NBADUH Jr Sub PERP (1-Jun) 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 9 9

10 QATAR 17 QATAR 18 (S) QATAR 19 QATAR z-spread (bps) QATAR 22 QATAR 23 (S) QATDIA QATAR 3 QATAR 4 QATAR 42 Sovereigns spread performance Qatar unch Jan Jul -24 Maturity -29 Curve on 2-Jan Curve on 3-Jul 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 -4-4 Qatar sovereign curve flattened during 1H on lack of supply and the move was more pronounced towards the long-end of the curve. 1 1

11 RAKS 16 (S) DUGB 17 (S) RAKS 18 (S) BHRAIN 18 (S) Unsec DUGB z-spread (bps) DUGB 21 PUTA DUGB 22 (S) DUGB 23 (S) RAKS 25 (S) *31/3/15 BHRAIN MUMTAK 21 (S) BHRAIN 22 BHRAIN 23 DUGB 29 (S) DUGB 43 BHRAIN 44 Unsec 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 Q Maturity 2-Jan 3-Jul DUGB BAHRAIN RAK Curve on 2-Jan Curve on 3-Jul 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 15; Source: NBAD; Bloomberg 11 11

12 SIB 16 (S) FGBUH 16 (S) UNBUH 16 ADCBUH 16 (S) ADIBUH 16 (S) NBADUH 17 FGBUH 17 (S) z-spread (bps) NBADUH 19 ADCBUH 17 FGBUH 17 ADCBUH 18 ALHILA 18 (S) FGBUH 19 EIBUH 17 (S) SIB 18 (S) ADCBUH 19 NBADUH *11/2/15 DIBUH 17 (S) FGBUH *24/2/15 ADCBUH *1/3/15 SIB (S) *17/3/15 TAMWEE 17 (S) EBIUH 17 EIBUH 18 (S) EBIUH 19 CBDUH 18 RAKBNK 19 NOORBK (S) *28/4/15 EBIUH *6/5/15 DIBUH (S) *3/6/15 BOSUH *8/6/15 EBIUH 22 *23/3/15 UAE financials spread performance unch Maturity 2-Jan 3-Jul 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 15; Source: NBAD; Bloomberg 12 12

13 HSBC 16 (S) QNBK 16 COMQAT 17 QNBK 17 BSFR 17 (S) DHBKQD 17 QIBKQD 17 (S) QIIK 17 (S) z-spread (bps) HSBC 19 QNBK 18 QNBK GULF 17 GULINT 17 QNBK NBOBOM 19 QNBK ALKHAL 18 BBK *24/3/15 GCC financials spread performance (ex UAE) unch unch Jan 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 15; Source: NBAD; Bloomberg 3-Jul 13 13

14 COMQAT 19 Sub ADCBUH 23 Sub ADCBUH 23 Sub CALL z-spread (bps) EBIUH 23 Sub CALL ADIBUH 49 (S) Jr Sub PERP DIBUH 49 (S) Jr Sub PERP EBIUH 49 Jr Sub PERP ALHILA 49 (S) Jr Sub PERP AUBBI 49 Jr Sub PERP *29/4/15 BKDBOM 49 Jr Sub PERP *27/5/15 NBADUH 49 Jr Sub PERP *17/6/15 EBIUH 49 Sub PERP DIBUH 49 (S) Jr Sub PERP */1/15 NTBKKK 49 Jr Sub PERP *9/4/15 GCC financials spread performance (Subordinated bonds) 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 15; Source: NBAD; Bloomberg 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 s and cash price basis. Maturity date / First Call Date for Perpetuals 2-Jan 3-Jul

15 z-spread (bps) MUBAUH 16 ETISLT 19 MUBAUH 19 DOLNRG 19 Sec SINK MUBAUH 21 ETISLT 21 MUBAUH 22 ETISLT 24 DOLNRG 21 Sec ETISLT 26 Abu Dhabi corporates spread performance (Inv. grade ex Ipic & Taqa) Jan 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 15; Source: NBAD; Bloomberg 3-Jul 15 15

16 INTPET 16 INTPET 17 INTPET 18 z-spread (bps) INTPET INTPET 21 INTPET 22 INTPET 23 INTPET 26 INTPET 41 Abu Dhabi corporates spread performance (Inv. grade Ipic curve) The Euro and GBP papers in particular performed very well relative to the curve which overall flattened during the first six months of unch Maturity 2-Jan 3-Jul Curve on 2-Jan Curve on 3-Jul 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 15; Source: NBAD; Bloomberg 16 16

17 TAQAUH 16 z-spread (bps) TAQAUH TAQAUH TAQAUH 18 TAQAUH 18 TAQAUH 19 TAQAUH 21 TAQAUH 23 TAQAUH 24 RPCUH 36 Sec SINK TAQAUH 36 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. -15 unch Maturity 2-Jan 3-Jul Curve on 2-Jan Curve on 3-Jul 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 15; Source: NBAD; Bloomberg 17 17

18 QTELQD 16 QTELQD 18 (S) QTELQD 19 z-spread (bps) RASGAS 19 Sec QTELQD 21 QTELQD 23 QTELQD 25 QTELQD 28 QTELQD 43 Qatar corporates spread performance (Inv. grade) 2 18 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 Jan 3-Jul Maturity QTEL RASGAS Curve on 2-Jan Curve on 3-Jul 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 15; Source: NBAD; Bloomberg 18 18

19 DEWAAE 16 SECO 17 (S) EMIRAT 16 MAFUAE 17 (S) DEWAAE 18 (S) SABIC 18 SABIC SECO 22 (S) SECO 23 (S) KWIPKK 16 SECO 24 (S) KHDRWY 25 (S) SINK *31/3/15 z-spread (bps) DPWDU 17 (S) KWIPKK 19 DPWDU *18/5/15 DEWAAE INVCOR (S) KWIPKK EMIRAT 23 (S) SINK MAFUAE 24 EMAARM 24 (S) OMGRID 25 *7/5/15 INVCOR 24 EMIRAT 25 SINK SECO 43 (S) SECO 44 (S) DPWDU 37 MAFUAE 49 Sub PERP GCC Corporates spread performance (Inv. grade ex Abu Dhabi & Qatar) The 5 to 1 year space performed well relative to the shorter and longer dated bonds Jan 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 15; Source: NBAD; Bloomberg 3-Jul

20 EMAAR 16 (S) ALDAR 18 (S) JAFZSK 19 (S) EMAAR 19 (S) NAKHL 16 Dh (S) DICUH 19 (S) FLYDU 19 (S) BATELC DIFCAE 24 (S) z-spread (bps) DUBAIH 17 DARALA 16 (S) DARALA 18 (S) GMSEDU 49 (S) Jr Sub PERP DAMACR 19 (S) DARALA 19 (S) GCC Corporates spread performance (Sub investment grade*) 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 % in Maturity 2-Jan 3-Jul 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

21 Contact Rakesh Sahu / Chavan Bhogaita Market Insights & Strategy Global Markets National Bank of Abu Dhabi Tel: chavan.bhogaita@nbad.com 21 21