Egyptian General Petroleum closed one of the largest future flow securitizations ever out of emerging markets last week, according to a source on the deal. U.S. investors gobbled up 70% of the mammoth $1.55 billion deal, casting aside concerns of terrorism in the Middle East as mostly irrelevant to this transaction. The company's track record on that front probably helped pre-empt the potential concerns, said another source familiar with the issuer. "Historically, Egypt hasn't had any interruption of shipment because of terrorism," he added.
The structure was split into three tranches. Sized at $400 million, the six-year A1 notes, wrapped by MBIA, priced at 4.623% or 75 basis points over three-year Treasurys. The A2 notes, totaling $250 million, were wrapped by XLCA and priced at 4.633% or 76 basis points over, a touch wide of the A1 piece despite having a shorter five-year maturity. Coming unwrapped, the six-year A3 class, sized at $904 million, priced to yield 5.265% or 140 basis points over. Moody's Investors Service and Standard & Poor's rated the unwrapped piece Baa1' and BBB', respectively. At both agencies the unwrapped tranche pierced the sovereign ceiling of Ba1' and BB+', respectively.