SGC Lands debut but sticks on price

摘要

Southern gas corridor printed the first non-investment grade CEEMEA corporate deal of the year, though the deal failed to budge from initial price thoughts even in the thick of a strong rally in credit markets. SGC, rated Bal/BB+/BB+, printed an Azerbaijan state-guaranteed US$1bn 10-year at 7% on Thursday or 526bp over mid-swaps. Analysts had expected the price to ratchet in from initial price thoughts, but it didn't move throughout execution. "We...saw adequate yield pricing around 6.8-6.9% (10-20bp tightening from IPT levels), including 20bp of new issue premium," said Trieu Pham, CEEMEA strategist at Mitsubishi UFJ Securities. Pham assumed a hypothetical Azerbaijan 2026 would trade at a Z-spread of 440bp, before adding 50bp to 60bp for the guaranteed structure of SGC and a further 20bp for the new issue premium. That would give a Z-spread of 510-520bp, roughly equal to a 6.8%-6.9% yield.