KommuneKredit looks on track to complete a US$1bn three-year trade that should give some indication of how strong the market is for other SSA hopefuls.
The Triple A rated Danish agency opened books on the August 2018 Reg S bond at mid-swaps plus 7bp area with IoIs in excess of the no-grow US$1bn deal size.
As the first fixed-rate SSA deal in August, bankers said the final result would prove instructive for other issuers eyeing the market.
“If we get a good result here, we could set a marker for other borrowers and take some of the uncertainty away. I imagine some of the Nordic issuers will keep a close eye on this,” said a lead banker.
“September may actually be a relatively difficult month with a strong likelihood of a rate rise and with important holidays in China, US and Japan, so the next two weeks could be important,” he said.
The last fixed-rate US dollar trade was from KfW, a US$1bn Reg S eight-year at the end of July. As a result, KommuneKredit was effectively reopening the market, which may go some way to explaining the concession on offer.
The issuer on Monday set IPTs at the high single digits over mid-swaps, before opening books on Tuesday morning at 7bp area over mid-swaps.
“That looks really cheap to me – I have their old January three-year at MS+2 so I would have thought this would have IPTs more like low/mid singles,” said a rival banker in reference to a 1.125% January 2018 note, a level corroborated by Eikon prices.
A lead banker saw that issue at 4-5bp over mid-swaps.
KommuneKredit also has a 1.125% March 2018 note outstanding, an original five-year deal. That was trading at swaps plus 5bp pre-announcement, suggesting a slimmer concession. Pricing is expected later today via BNP Paribas, Daiwa, JP Morgan and Nordea.
