EM CEEMEA CREDIT: Kingdom of Bahrain: FV for $ L8Y Sukuk & 12Y conv’l deals
(BHRAIN; NR/B+neg/B+neg)
L8Y Sukuk:
IPT at 6.25% area
FV at 5.75% area
12Y:
IPT at 7.00% area
FV at 6.50% area
- The Kingdom of Bahrain has mandated for potential bond issuance, as reported by Bloomberg. To gain some perspective, we look at Bahrain’s z-spread moves since last primary issuance at the end of April. We note the longer end of the Sukuk curve has tightened some 50bp, whilst the conventional format curve charts some 100bp tighter. We note how the two curves have come closer over the period (see chart below).
- We sketch our FV considerations for the proposed Long 8Y Sukuk format deal at z+225bp or 5.75% yield area. That is 20bp spread pick up vs the seasoned BHRAIN 6.25 Jul33 charting at z+205bp or 5.60% yield area.
When looking at the proposed 12Y conventional Eurobond format, we see FV at z+283bp or 6.50% yield area. That is 20bp pick up vs the seasoned BHRAIN 7.5 Jul37 charting at z+263bp or 6.35% yield area.
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BUNDS: A Very Busy Week ahead
- The German Bund trades lower going into the Cash Open, as expected Month End had no impact on Friday, and with August behind us, risk is tilted to the downside.
- The early standout flow is in the Schatz, but this is all related to the spread being bought at -10.5.
- The September will expire next Monday for Eurex Bonds.
- Next support in Bund is at 129.16, followed by the 2.80% in Yield.
- Resistance is at today's high, 129.50, but better is seen at 130.00 despite printing a 130.06 high on the 14th August.
- This is a very busy Week ahead, and all about the Data, Bond Traders will also look to complete their Eurex Rolls.
- Today only sees, final Mfg PMIs for France, Germany, EU, UK.
- There are no Data out of the US given that this is a US Bank Holiday (Labour Day).
BRENT TECHS: (X5) Gains Considered Corrective
- RES 4: $79.16 - 2.618 proj of the Apr 9 - 23 - May 5 price swing
- RES 3: $77.28 - 2.382 proj of the Apr 9 - 23 - May 5 price swing
- RES 2: $76.39 - High Jun 23 and a bull trigger
- RES 1: $69.06/71.93 - High Aug 4 / High Jul 30 and a key resistance
- PRICE: $67.36 @ 07:03 BST Sep 1
- SUP 1: $64.50 - Low Jun 30
- SUP 2: $60.82 - Low May 30
- SUP 3: $58.37 - Low May 5
- SUP 4: $57.81 - Low Apr 9 and a key support
Despite trading closer to their recent highs, a bear cycle in Brent futures remains intact and short’-term gains are considered corrective. Sights are on $64.50, the Jun 30 low, where a clear break would confirm a resumption of the bear leg and pave the way for an extension lower. This would open $60.82, the May 30 low. Key short-term resistance has been defined at $71.93, the Jul 30 high. Clearance of this level would cancel a bear theme.
BTP TECHS: (U5) Support Remains Intact For Now
- RES 4: 122.35 2.500 proj of the May 14 - 20 - 21 price swing
- RES 3: 122.00 Round number resistance
- RES 2: 121.73 High Jun 13 and the bull trigger
- RES 1: 121.13 High Aug 15
- PRICE: 120.25 @ Close Aug 29
- SUP 1: 119.59 Low Jul 25 and key short-term support
- SUP 2: 119.48 Low May 26
- SUP 3: 118.87 Low May 21
- SUP 4: 118.51 Low May 14 and key support
The primary trend condition in BTP futures is unchanged and the direction remains up. For now, the contract continues to trade inside a broad range and the Aug 15 sell-off signals scope for a move towards the lower end of the range. Key support to watch lies at 119.59, the Jul 25 low. A clear break of this level would highlight a range breakout and a bearish threat. Key resistance is unchanged at 121.73, the Jun 13 high.
