The Deals of the Year 2017 winners from the Middle East.

Bonds: corporate 

WINNER: Teva $20.4bn-equivalent bond

Active bookrunners: Bank of America Merrill Lynch, Barclays, BNP Paribas Credit Suisse, HSBC, Mizuho Financial Group 

Financial adviser: Rothschild

Over four days in July 2016, Teva Pharmaceuticals Industries conducted a landmark global bond offering to help fund its $40.5bn acquisition of Actavis’s generics business. The Israeli drugmaker raised the equivalent of $20.4bn of senior unsecured notes split between three currencies. 

A $15bn six-tranche offering was the first to hit the market. This was followed by a Ä4bn three-tranche deal and finally SFr1bn ($1bn) spread across three tranches. The string of transactions were timed to perfection. On July 13, Teva announced marketing for the dollar- and euro-denominated deals, and a potential Swiss franc deal. After two days of marketing in the US, two teams flew to Europe to roadshow the euro deal. This enabled the team to meet a maximum number of investors as quickly as possible, thereby limiting exposure to market risk.

Within the midst of 2016’s bond market volatility, Teva seized a window of favourable conditions between July 18 and July 21 to bring the deals to market. This followed the worst of the Brexit fallout from the UK but was before markets closed for the Northern Hemisphere summer. It also allowed Teva to benefit from record low interest rates and benchmark bond yields.

Thanks to this carefully orchestrated plan, the deal was a huge success. The combined order book hit the equivalent of about $97bn – the third biggest for a corporate bond ever – which meant pricing on all tranches could be tightened from guidance. The weighted average coupon for the dollar deal was 2.65% for an average maturity of 9.4 years. The weighted average coupons for the euro and Swiss franc deals were 0.89% and 0.56%, respectively.

The global fundraising racked up a string of records including the fifth largest corporate bond ever, the largest bond from the central and eastern Europe, the Middle East and Africa region, the largest ever dollar and euro transactions from the region, and the second biggest Swiss franc offering from the region. 

Bonds: SSA 

WINNER: Kingdom of Saudi Arabia’s $17.5bn bond

Joint global coordinators and joint bookrunners: Citi, HSBC, JPMorgan 

Joint bookrunners: Bank of China, BNP Paribas, Deutsche Bank, Goldman Sachs, Morgan Stanley, Mitsubishi UFJ Financial Group, NCB Capital

Saudi Arabia’s debut international bond in October 2016 was one of the year’s most highly anticipated deals. The $17.5bn triple-tranche 144A/RegS transaction was the biggest emerging market bond and biggest sovereign syndicated bond ever.

This landmark deal is part of Saudi Arabia’s broader reform agenda – known as the National Transformation Programme 2020 – which is intended to help the world’s biggest oil producer adjust to lower petroleum prices. 

Global coordinators Citi, HSBC and JPMorgan were the lynchpin of the deal. They took the lead on documentation, in which Saudi Arabia made comprehensive disclosures regarding its assets for the first time. They also had a key role educating investors on the country’s plans to diversify its oil-reliant economy through fiscal and structural reforms, an expansion of its defence and small to medium-sized enterprise sectors, and setting up special zones to encourage investment in certain industries.

During roadshows, which took place in London and the US in early October, investors were not given guidance on the deal’s likely size or pricing. Nor were other sovereigns used as a reference when determining the start point for pricing. This gave the lead banks flexibility to set deal terms based on investor feedback, and allowed them to create a true regional benchmark. 

The deal was launched in five-, 10- and 30-year tranches, with price guidance of Treasuries plus 160 basis points (bps) area, 185bps area and 235bps area, respectively. Orders peaked at $67bn, allowing pricing to tighten across each tranche. The five-year notes pay a 2.59% coupon, 10 years 3.41% and the 30-year tranche 4.62%.

The allocations prove the deal’s broad appeal. It attracted not just emerging market investors, but also high-grade investors and a number who had not looked at the region before. It also had a healthy mix of buyers from the Middle East, the Americas, Europe and Asia. 

Capital raising: FIG 

WINNER: NBAD’s $696m formosa bond

Joint structuring agents and joint bookrunners: Crédit Agricole CIB, HSBC

Joint structuring agents: Bank of America Merrill Lynch, Citi, National Bank of Abu Dhabi, Mitsubishi UFJ Financial Group

It has been a transformative 12 months for National Bank of Abu Dhabi (NBAD). Earlier in 2017 it closed its merger with First Gulf Bank, to create the United Arab Emirates’ biggest lender. During the months preceding their combination, NBAD made strides towards its goal of diversifying its funding base by accessing new investors in new geographies.

In October 2016 it sold a $696m zero-coupon, multi-callable formosa bond due 2046. Formosa bonds are those issued in Taiwan but denominated in a foreign currency. The 30-year notes are the longest tenor for a formosa bond from the Middle East, the first dollar-denominated formosa bond from the UAE, and NBAD’s first foray into the formosa market. 

Initially, a benchmark issuance of $250m to $300m was targeted. The order book was oversubscribed within six-and-a-half hours of its launch, paving the way for it to be upsized to $621m. Before the bonds settled, it was upsized again to $696m.

As with other formosa bonds, NBAD’s was dominated by high-quality investors; predominantly insurers looking for long tenors to match their liabilities and respectable yield in a low-interest-rate environment. It was the bank’s first public transaction since announcing its tie up with First Gulf Bank in July 2016, and the overwhelming response signalled investor confidence in the merger.

The bonds can be called on October 21, 2021 and every five years thereafter. They are zero coupon, but if held to maturity will yield the equivalent of 4.2% per annum internal rate of return. 

In January 2017, NBAD built on the success of its inaugural issuance by placing another 30-year senior unsecured formosa bond with institutional investors for $885m. Over three months, NBAD raised more than $1.5bn in the Taiwanese market, cementing its place in the burgeoning asset class. 

Infrastructure and project finance 

WINNER: Bahrain’s $912m LNG Terminal

Banking syndicate: Ahli United Bank, Crédit Agricole CIB, ING Bank, Natixis, Santander, Société Générale, Standard Chartered Bank

Since 2014, the National Oil & Gas Authority of Bahrain has been working towards building the country’s first liquefied natural gas (LNG) terminal. One of the smallest countries in the Persian Gulf, Bahrain’s biggest export is refined petroleum products. The new terminal is intended to supplement local gas production, to ensure there are no shortfalls during periods of peak demand.

This is the Middle East’s first import and regasification terminal to be developed on a public-private partnership basis. It achieved an important milestone in December 2016 when it reached financial close on a $741m, limited recourse 20-year loan. The syndicate of international and regional lenders included Ahli United Bank, Banco Santander, Crédit Agricole, Korea Development Bank, Natixis, Société Générale and Standard Chartered. 

The sponsor consortium – which includes Gulf Investment Corporation, Teekay LNG Partners and South Korea’s Samsung C&T – committed $328m of equity. The engineering procurement construction contract was awarded to Seoul-headquartered GS Engineering & Construction. The strong presence of Korean firms led K-Sure, the country’s export credit agency, to provide commercial and political risk cover for about $600m of the debt financing for its full tenor.

This support from K-Sure was of considerable help during the financing. The 20-year tenor is longer than what some banks can bear, given the high capital charges typically associated with long maturities. Furthermore, in June 2016 Fitch downgraded the Bahrain government from BBB- to BB+ citing the effect of low oil prices on its finances. It was the last of the major credit rating agencies to downgrade the country to non-investment grade.

Nonetheless, the loan was successfully syndicated, paving the way for construction to start in January 2017. The terminal will consist of a floating storage unit, an offshore LNG-receiving jetty and breakwater, and an onshore gas-receiving and nitrogen production facility, and is expected to be completed by early 2019.

Islamic finance 

WINNER: SR3.6bn funding for Jeddah Economic City

Sole bookrunner: Alinma Bank

Back in 2015, an SR8.4bn ($2.24bn) sharia-compliant fund was established to help finance the construction of Jeddah Economic City, the circa $100bn plan to reposition Saudi Arabia’s second biggest city into a thriving commercial hub. 

The private, closed-end Capital Market Authority-approved vehicle is known as the Alinma Jeddah Economic City Real Estate Fund. 

In November 2016, it reached another milestone by closing SR3.6bn of mid-term financing, one of Saudi Arabia’s biggest real estate financing deals of the year. The funds will be used to develop the land and infrastructure for phase one of the project, and to continue the construction of Jeddah Tower, which will be the world’s tallest building at more than 1 kilometre high. The money will also go towards other flagship real estate projects within the city. 

The fund’s first round of financing came at a crucial time for the project. The plummeting price of oil has hit Saudi Arabia’s petroleum-dependent economy, depleting the government’s foreign currency reserves and prompting it to cut costs. Against this backdrop, some queried whether the ambitious Jeddah Economic City could proceed as planned. 

Alinma Bank provided the much-needed financing by combining two Islamic finance products: ijarah, a lease-based contract, and bai al-ajel. This presented an innovative solution to the project’s capital needs. It also cemented sharia-compliant financing’s important role within project finance across the Middle East. 

Jeddah Economic City will occupy 5.3 million square metres of land and is scheduled to be completed in 2035. It encompasses an old town, business district, financial centre, public spaces, malls and a man-made waterfront. Its residential facilities are designed to accommodate up to 2 million people.

Leveraged finance and high yield 

WINNER: Financing of BC Partners and PSP’s stake in Keter Plastic

Financial adviser: Rothschild

Bookrunners: JPMorgan, UBS

In July 2016, funds advised by BC Partners and Canada’s Public Sector Pension Investment Board acquired a €1.38bn majority stake in Israeli furniture maker Keter Plastic from its founders, the Sagol family. The deal, which was conducted via a competitive auction among financial sponsors, was the country’s biggest ever private equity transaction.

As sole financial adviser to the sellers, Rothschild was instrumental in bringing in suitable bidders, educating them, and creating competitive tension to significantly increase Keter’s valuation. It also ran a full-service staple financing, a process that reduces execution risk by ensuring the ultimate buyer has access to sufficient funds. 

The stapled financing consisted of an institutional loan and high-yield bond package, and required underwritten commitments from bookrunners. Rothschild tested the appetite of local and international financiers, educated a wide group of lenders on Keter and its credentials, and took a number of them through due diligence exercises. 

Keter also had to be taken through a private rating process with regard to each of the financing structures being considered by bidders. This required the deal’s advisers to identify Keter’s peers, advise on different rating methodologies, and pitch its credit story to the rating agencies.

The financing package ultimately consisted of a Ä690m term loan B that was syndicated within a few months of Keter’s sale being signed. It priced at 425 basis points over Euribor with a 1% Euribor floor. 

The underwriters leveraged off the private ratings work and brought the loan to market at the perfect time; namely, ahead of macro risks such as the US presidential election, and while the European leveraged finance market was strong. The syndication rounded out a landmark deal for the Israeli market. 


WINNER: Qatar National Bank’s €2.25bn term loan

Underwriters, mandated lead arrangers and bookrunners: Crédit Agricole CIB, Société Générale

Mandated lead arrangers: Doha Bank, ICBC, ING Bank, UniCredit 

Arranger: Commerzbank 

Managers: Banque International a Luxembourg, BCEE, KfW, UBI Banca, Shinkin Central Bank, State Bank of India, Zurcher Kantonalbank

The drastic fall in oil prices since mid-2014 has created huge shifts in the Middle East’s debt markets. The most tangible change is the swathe of sovereigns of oil-reliant economies that have been forced to tap international bond markets for the first time. 

It has also impacted international banks’ appetite to lend to regional borrowers. When they do, club loans is the favoured format. Underwriting has become somewhat of a rarity, largely due to concerns it may be hard to sell the deals into the market. 

Against this backdrop, Qatar National Bank’s Ä2.25bn term loan facility, which was signed in June 2016, truly stands out. Crédit Agricole Corporate and Investment Banking (CIB) and Société Générale CIB underwrote the three-year term loan facility on a 50/50 basis. 

It was launched as a €1.5bn deal, but was increased by 50% to reach €2.25bn off the back of strong demand. This was despite the fact that Qatar National Bank raised $3bn via a three-year unsecured term loan in the international loan markets only one year earlier. 

Aside from raising the finance, one of the issuer’s prime objectives was to diversify its funding base. The dollar is the favoured currency for Gulf Co-operation Council borrowers looking to tap international loan markets, as it is what most local currencies are pegged to. But by issuing in euros, Qatar National Bank could attract European banks, which have lower funding costs than their US rivals thanks to the region’s record-low interest rates. It also led to a balanced syndicate comprised of 10 European banks, four lenders from Asia and one from Qatar.

The loan pays Euribor plus 105 basis points and the proceeds were earmarked for general corporate purposes.


WINNER: Adeptio’s acquisition of 69% stake in Americana

Adviser to Adeptio: Goldman Sachs 

Adviser to Al Khair National: Rothschild

In 2016, Kuwait Food Company, better known as Americana, was at the centre of the biggest merger and acquisition (M&A) transaction ever in the Gulf Co-operation Council region consumer sector. On June 18 it was announced that Kuwait’s Al Kharafi family and its firm Al Khair National for Stocks & Real Estate had agreed to sell its 69% stake in Americana to Adeptio, an investment firm led by Dubai businessman Mohamed Alabbar. 

Americana is a food conglomerate which runs the likes of KFC, Pizza Hut and Costa Coffee among other restaurants across the Middle East and north Africa (MENA) region. Its widespread operations, plus the fact it was listed on the Kuwait Stock Exchange, made for a complicated sales process.

Nonetheless, the sale completed by October 23, with Adeptio paying Kd2.65 ($8.69) per share. In January 2017, in accordance with exchange rules, Adeptio launched a mandatory tender offer for the remaining shares. The price tag represented a 26% premium to the closing stock price the day before the deal was announced, and valued Americana at $3.4bn. 

Plans to sell the controlling stake in Americana date back to 2014. In the two-plus years between those first discussions and the deal’s closing, the company’s key markets endured some tough times. For example, the low oil price environment hurt consumer confidence in some parts of the Middle East, while Egypt unpegged its currency from the US dollar leading to a circa 50% devaluation.

The transaction’s advisers had to navigate these and other macroeconomic changes, to broker a deal that was acceptable to all stakeholders. Thanks to their efforts, the MENA region saw one of its biggest ever private sector sales which paves the way for more M&A activity throughout the region. 


All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker

For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Top 1000 2023

Request a demonstration to The Banker Database

Join our community

The Banker on Twitter