Nigeria's Guaranty Trust Bank (BB-/B+ by S&P/Fitch) is coming 25-40bp back of its outstanding bond, after announcing guidance on a new five-year US dollar-denominated benchmark bond.
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| Agbaje |
The illiquid nature of GTB's only note outstanding - a 7.5% USD500m May 2016 - somewhat complicates the relative value analysis, as the bond has experienced price swings of more than 40bp over the past few sessions.
The 2016s were spotted trading at a z-spread of anywhere between 435bp and 477bp on Friday, according to Thomson Reuters, when the issuer wrapped up investor meetings for the issue.
This morning the note opened at 448bp, spiked to 477bp, before tightening to 434bp, which is roughly where it was quoted just ahead of the new bond's guidance announcement, suggesting a 40bp premium.
One banker away from the deal argues, however, that based on composite quotes the premium is roughly 25bp. However, given that there is only one bond to reference against, he reckons guidance has been driven more by roadshow feedback than scientific analysis.
JP Morgan and Morgan Stanley are the bookrunners on the 144A/Reg S issue, which is expected to price today.
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