DUBAI Feb 6 Kuwait's Equate Petrochemical
(IPO-EQUP.KW) will issue a $750 million, seven-year sukuk early
next week, company representatives told investors on Sunday
during the first of a series of fixed income meetings ahead of
the debt sale, sources familiar with the matter told Reuters on
With the planned sukuk sale, Equate - a joint venture
involving Kuwait's Petrochemical Industries Co and Dow Chemical
Co - would be the first Gulf Cooperation Council
corporate to tap the international debt capital markets this
year, after a slow start dominated by issuers in the banking
The new paper, part of a $2 billion sukuk programme, is
likely to offer about 180 basis points over midswaps, the
sources said, adding that the pricing would be very much in line
with the company's existing debt curve.
Telephone calls to Equate's headquarters in Kuwait seeking
comment were not answered.
Equate presented a "good story" to investors in Abu Dhabi
and Dubai on Feb. 5, fund managers said. Roadshow meetings will
continue in London on Feb. 6 and 7, Hong Kong on Feb. 9,
Singapore on Feb. 10 and Kuwait City on Feb. 12.
"Generally in the sukuk space having a corporate coming up
with a sizeable deal is quite rare, so it's a deal which is
going to gather significant attention," said one fixed income
"It's a company with a good rating and existing debt which
is trading well. So you're basically dealing almost with a high-
grade sukuk." Equate is rated Baa2 by Moody's and BBB+ by
Standard & Poor's.
The sukuk proceeds will be used to refinance existing debt
as the company aims to maintain its net debt to EBITDA ratio,
which is currently 2.9 times, said the sources. The fact that
the proceeds will not be used for additional leverage gives
further support to Equate's story, they added.
A single, seven-year tranche looks likely to sit well with
sukuk investors, who are normally cautious when it comes to
Equate issued its debut conventional bonds in November last
year, raising a total of $2.25 billion split into a long
five-year bond maturing in March 2022 and a 10-year tranche. The
2022s were trading at 169.4 basis points over
midswaps on Monday while the 2026s were trading at
around 210 bps over, Thomson Reuters data showed.
The planned sukuk will be arranged by Citi, HSBC, JP Morgan,
KFH Capital and NBK Capital as global coordinators and
bookrunners, with Mizuho, MUFG, National Bank of Abu Dhabi and
SMBC Nikko joining as joint bookrunners.
(Editing by Andrew Torchia)