The Eur 100 ($107) notes had a launch price of Eur 98.63 ($106) and had traded up to Eur 99.25 ($107) by 18 February. With a coupon of 6.25 per cent, the paper had a launch spread of 230 basis points (bp) over European mid-swaps.

'Appetite for the bond was very strong and it received commitments of Eur 500 million [$537 million],' says one of the lead arrangers. 'The Tunisians were focusing on developing their European investor base and they certainly succeeded in doing this.' Roadshows in five major European financial centres helped attract wide interest in the bond, ensuring its broad distribution. German and Austrian investors took up around 40 per cent of the offering, while 20 per cent was placed in the UK and Ireland.

Having tapped the global market before, Tunisia was not that concerned with attracting US investors, so the bond was not registered with the Securities & Exchange Commission (SEC). Nevertheless, offshore US investors subscribed to 8 per cent of the offering.

Tunisia has been a regular issuer of sovereign bonds in recent years. The debut euro-denominated Eurobond launched in 1999 was followed by four yen-denominated bonds totalling Y105,000 million ($882 million) in 2000 and 2001, and a $650 million 144A facility last May (MEED 24:5:02; 5:4:02, Cover Story).

'It is unlikely that we will see any more bonds coming out of Tunisia in the immediate future,' says the banker. 'The government has covered its needs, for 2003. It may come back to the market at the end of the year'.

The Tunisian offering comes only a month before the start of the roadshow for Morocco's long-awaited Eurobond. The original target for the launch of the kingdom's debut Eurobond, expected to be in the Eur 400 million-600 million ($428 million-641 million) range, was late 2001, but this was postponed to 2002 due to unfavourable market conditions. The establishment of a new government last November led the bookrunners for the bond, Merrill Lynch and BNP Paribas, to delay the launch again (MEED 12:7:02).

'The Tunisian bond will probably enhance any future Moroccan issue as it has opened the eyes of German investors in particular to North African debt, whereas previously they had been concentrating on Polish and Hungarian offerings,' a banking source says.

Tunisia has been assigned a BBB sovereign rating by international rating agencies Fitchand Standard & Poor's.