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Sunday, 17 December 2017

FIG market back with a bang

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  • A Rabobank sign is seen at its headquarters in Utrecht

A flurry of FIG deals has abruptly overturned the sleepy start to the year as issuers capitalise on the best opportunity this week to launch new transactions.

“It’s a short week, the only window is today or tomorrow,” said a syndicate official. “The market is good enough. I think a lot of people are pushing forward so they don’t get wrong-footed tomorrow.”

Bankers were in agreement that deal flow would retain this pace into Thursday before dropping off on Friday with the release of the US non-farm payroll data.

Spreads on senior bonds widened towards the end of 2014, but have since tightened back in. The iTraxx senior index hit 78bp in mid-December. It opened the year at 61.6p, widened and was quoted at 70bp today, according to Tradeweb.

“People are keen to capture some of the improved technicals in terms of spreads,” said one banker. “Issuers are paying decent concessions.”

Abbey National Treasury Services received a rave reception for a seven-year senior deal, drumming up more than €5bn in orders for a €1.5bn print. Books closed at 10.10am with more than 300 accounts involved, a lead said.

“It’s one of the best received senior deals for a long time,” he added.

The issuer announced the deal early this morning via leads Barclays, BNP Paribas, Deutsche Bank, Santander GBM and UBS with IPTs of mid-swaps plus 75bp area. A lead said this offered a new issue premium of around 20bp.

It was tightened over the morning to plus 70bp area before being revised to a final spread of 65bp, which the lead had flagged as the target spread.

The Santander subsidiary last issued a €1bn five-year deal in November at mid-swaps plus 51bp, which has since tightened 2bp.

Bank of Nova Scotia, meanwhile, is following up on Tuesday’s sterling covered bond with a five-year euro senior floater.

The Canadian bank started marketing the deal via Scotiabank, Deutsche Bank and Goldman Sachs at 40bp area over three-month Euribor. The deal will price at plus 38bp, with the size to be confirmed later today.

French bank Banque Federative du Credit Mutuel (BFCM) also joined the party, with a 10-year euro senior that leads Commerzbank, Goldman Sachs and UBS started marketing at mid-swaps plus 60bp area.

“With the 10-year, it’s all about the rates,” said a banker. “People are expecting them to drop even further.”

Leads looked at the bank’s French peers, including long bonds from BNP Paribas, Credit Agricole and BPCE, as well as BFCM itself.

BFCM issued a €1.5bn 10-year in March last year at mid-swaps plus 88bp, which has since tightened to plus 43bp on the bid side, according to Tradeweb.

The banker saw fair value for today’s deal around 15bp inside IPTs.

By the 10am update, books had exceeded €1.5bn, while guidance remained unchanged at plus 60bp area.

There is also activity at the shorter end of the curve as Societe Generale and Rabobank Nederland both announced two-year euro floaters.

SocGen started marketing its self-led deal at 30bp area over three-month Euribor. Guidance was revised at 27bp area for a €2bn trade that will price later today.

Rabobank, meanwhile, opened books at 20bp area over three-month Euribor via Citigroup, Goldman Sachs and its own syndicate team. They closed at 10.45am in excess of €3.5bn. Guidance was set at plus 19bp.

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