LONDON, March 5 (IFR) - The Republic of Azerbaijan is looking to raise USD1bn through its debut Eurobond issue, which will have a maturity of 10 years, an investor who met with the sovereign told IFR on Wednesday.
The country, rated Baa3/BBB-/BBB-, plans to open books on the trade next week and is aiming to price the issue some 100bp inside state-owned oil company Socar, added the investor.
“It seems like a pretty good story. It is very difficult to poke holes in it,” he said.
Socar has a 2023 note outstanding trading at z-spread of 308bp to yield 5.59%. If the new issue were to price 100bp inside that level, however, Azerbaijan would be trading at tighter spreads than higher rated Russia, whose 2023 are quoted at around 230bp over swaps.
“Should Azerbaijan trade inside Russia? I am not sure,” said the investor, adding that potential buyers are likely to demand a spread of around 240bp-250bp for the new issue.
Azerbaijan is meeting investors in Europe, the UK and the US this week ahead of the potential bond sale.
Bankers said that investors are flocking to the meetings ahead of what is the only public bond mandate from the CEEMEA region.
The timing of the issue will depend on the crisis between Russia and Ukraine, although President Putin’s statement that force would only be used as a last resort has helped calm the market backdrop.
Barclays, Citigroup and Deutsche Bank are the lead managers. (Reporting by Davide Scigliuzzo; Editing by Sudip Roy)