Investors proved receptive to a rare offering of euro-denominated opco senior paper from ING on Monday, with the two-part €1.75bn three-year transaction exceeding expectations against a backdrop of softening markets across all asset classes. The deal was the Dutch bank’s first opco senior issuance in the single currency in over four years. The new trade was split across €1bn fixed and €750m floating-rate notes that are set to mature in October 2026. “The trade superseded our base-case outcome on price and frankly on size as well,” a lead banker said. “We have had a bullish view on the front end of the senior preferred market, particularly over the last week and month, so I’m not surprised that ING had a very strong response here but I am surprised that it went as well as it did.” For the lead banker, adopting a US-style execution in euros – by offering fixed and floating tranches targeting the same tenor – worked in ING's favour. "Had we gone with a straight euro fixed-rate tranche only, I think we would have had a smaller [deal] size than that," he said. "Adding the floating-rate tranche allows the issuer pricing leverage and allows them to take larger size." Leads Deutsche Bank, ING, IMI-Intesa Sanpaolo, JP Morgan and Natixis opened books with guidance at mid-swaps plus 85bp area and three-month Euribor equivalent for the fixed and FRN benchmarks. With orders peaking at €2.6bn for the fixed-rate tranche and €1.5bn for the floater, the leads set the spreads at 58bp and 66bp, respectively. The final new issue concessions stood within a 3bp–5bp range, according to the lead banker. Compatriot ABN AMRO served as a marker here. Back in June, it priced a €1bn 3.875% December 2026 senior preferred transaction at mid-swaps plus 65bp, which was quoted around 51bp on Monday, according to Tradeweb figures. ABN also launched a €750m 3.625% January 2026 senior preferred at the onset of the year that was quoted around 37bp. The books slightly eroded subsequently and closed north of €2.2bn and €1.4bn for the fixed and FRN tranches, respectively. “Could we have done a lot larger transaction if ING had wanted it? Absolutely, at around a similar price, but they were capped at €1.75bn,” the lead banker said. ING's re-entry came the week after Dutch authorities unveiled plans for a 70% increase in the country's bank levy, which, according to ING analysts, will amount to 6%–11% of banks’ pre-tax profits and could be detrimental to their ability to increase capital buffers. “The discussions around bank tax in Europe in general is not a new topic. It’s been around over the last few years," the lead banker said. "In my view, it has been and still is an equity story parameter, it does not affect the credit quality of banks in Europe. … For sure, the headlines are certainly not helpful for banks, as bank stocks are hurting as a result of this, but the credit spaces are by and large unchanged.” Looking ahead, a €300m no-grow 10.25NC5.25 green Tier 2 transaction is in the works for Bayerische Landesbank. BayernLB, ING, Natixis and UBS held a series of investor calls on Monday. "A sub-benchmark Tier 2 by a German Landesbank – this is usually an asset class which will pay up in terms of spread in context of rating and credit quality. ... Tier 2 stuff from domestic names which are designed to be sold to global asset managers are usually uneasy tasks to solve," a second banker, away from the trade, said. "The whole German market is keeping a close eye on it, as it is an interesting reference point for others who may still look into Tier 2s going forward," he also said.
Bellwether