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CASE STUDY: Kuwait US$8bn Debut Marks Largest Dual Tranche Bond in Emerging Markets

CASE STUDY: Kuwait US$8bn Debut Marks Largest Dual Tranche Bond in Emerging Markets

Kuwait maintained GCC sovereign mega-bond momentum, tapping the markets for an aggregate of US$8bn in the biggest ever EM dual-tranche issuance. Kuwait’s debut on global debt capital markets marks the biggest CEEMEA transaction this year to date.


In March 2017 Kuwait was looking to tap the international debt markets for the first time, following the footsteps of a host of GCC sovereigns looking to fill a budget deficit induced by a spell of low oil prices.

On 20 March, the GCC state made its debut on the international debt capital markets with largest ever dual-tranche offering from any emerging market, a transaction that was over 3 times oversubscribed with the orderbook peaking at US$29bn.

The issuance was timed to launch ahead of the US Federal Reserve meeting, which was widely expected to lead to a rate hike and push yields up worldwide, so Kuwait used the opportunity to lock in lower yields.

Transaction Breakdown

On 3 March, the State of Kuwait announced a series of investor meetings in London and the US, to commence on 6 March. During a two-day roadshow in London and additional one-day meetings in New York, Boston, and Los Angeles, and coinciding with the UAE open, the order books were formally opened with initial price thoughts of T+100bp area for the 5-year tranche and T+120bp area for the 10-year.

The deal received remarkable interest, with orderbooks having surpassed US$15bn by 11:00 UK time, at which point a book size update was released to the market.

By the time the US market opened, the orderbook had grown further surpassing US$20bn, at which point price guidance of T+85bp and T+110bp were released to the market.

With US orders taken, the orderbook peaked in the region of US$29bn, making it largest ever orderbook in an emerging market dual-tranche deal and second largest orderbook from a GCC issuer.

The final spreads were set at 14:45 UK time, with syndicates indicating an expected total deal size of US$6-8bn.

The transaction ultimately launched and priced at a total deal size of US$8bn, inside of final price guidance levels at T+75bp for a US$3.5bn 5-year tranche and T+100bp for a US$4.5bn 10-year tranche. This represented a tightening of 25bp and 20bp, respectively, versus initial price thoughts.

European investors led on the 5-year tranche, whereas over half of the 10-year tranche went to US-based accounts, with asset managers taking 65% of the total deal on aggregate.

Nearly half (46%) of the 5-year tranche was allocated to accounts in Europe; 26% was placed with local MENA investors, a further 24% to the Americas and 4% distributed to Asia.

Asset managers composed 60% of all participants on the 5-year tranche, with banks picking up another 22%, SSAs taking 13% and the remaining 5% of the notes allocated to insurance and pension funds.

About 51% of the 10-year tranche was placed with accounts based in the US, 26% of the notes went to MENA accounts, 19% to accounts in Europe and the final 4% to Asia.

Asset managers picked up the majority of the 10-year notes at 68%, followed by banks (25%), SSAs (3%) and insurance & pension funds (4%).


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