The European steelmaker – formed in 2006 through a merger between Arcelor and Mittal Steel – started marketing the paper at price thoughts in the mid-swaps plus 230bp area.
Later, it set guidance in the 215bp area on books over €3bn, before revising to plus 210bp area, plus or minus 2bp, on books over €3.4bn. It printed €750m of bonds at plus 210bp, offering a coupon of 3% later in the afternoon.
Due in March 2019, the issue extends the group’s existing senior euro curve beyond a 5.75% March 2018 offering that was bid around mid-swaps plus 195bp pre-announcement, according to Tradeweb.
Based on the steepness of the remainder of ArcelorMittal’s curve, fair value on the new notes looked to be around 210bp over swaps, implying no new issue concession.
Bankers said that this sent a strong signal of investor confidence in the name, especially considering the company’s chequered recent past in credit markets.
In January, it announced a shock redemption of its existing hybrid bonds at a cash price of 101, burning investors as the value of the notes tumbled by almost eight points. The move was prompted by Moody’s last July publishing new guidelines that meant hybrids from junk-rated issuers would no longer qualify for equity credit.
ArcelorMittal is rated Ba1/BB+/BB+, having been downgraded by Moody’s in November 2012.
Speaking about Tuesday’s deal, however, bankers said that the offering likely ticked investors’ boxes for an array of reasons.
Scarce
Firstly, ArcelorMittal is a relatively rare name in primary euro bond markets, having not issued since March 2012.
In addition, similarly rated corporates printing deals in recent weeks have shown just how enticed investors are by paper from this point in the ratings spectrum.
On March 5, German construction group HeidelbergCement, rated Ba1/BB+, priced a €500m March 2019 bond that attracted a book of €2.5bn thanks to targeting both traditional high-grade and high-yield buyers.
Last week, CNH Industrial, the Ba2/BB+ rated Italian tractor-maker born from the merger of Fiat Industrial and its CNH unit, printed €1bn of five-year bonds on a €3.3bn book.
By Wednesday, ArcelorMittal’s new paper was bid at around mid-swaps plus 206bp according to Tradeweb – 4bp through reoffer.
In terms of allocations, Germany and Austria took 21% of the bonds, France 24%, the UK and Ireland 16%, Italy 16%, Iberia 8%, Switzerland 7%, Benelux 4%, the Nordics 2% and others the remaining 2%. Fund managers took 63%, banks and private banks 17%, insurance and pension funds 12%, hedge funds 5% and others the remaining 3%.
The average ticket size was €7.2m, according to one of the leads, with four orders coming in in excess of €100m.
