AP Moller goes solo in euro market
AP Moller-Maersk printed the only euro-denominated investment-grade deal on Wednesday, with the issuer taking advantage of a slowdown in supply this week that has helped pricing power shift back to borrowers.
As the first wave of post-summer supply emerged, issuers were confronted by investors wanting bigger concessions – or even a concession. But as dealflow has dwindled, so has that pushback, enabling corporates to price at extremely tight levels again, with more recent deals landing in line with or even inside fair value.
AP Moller (Baa1/BBB+) is just the latest example, with its €500m no-grow nine-year green bond leaving nothing on the table. The deal landed at 98bp over swaps after leads had opened books at plus 130bp–135bp.
Leads BNP Paribas, Bank of America, Danske Bank, Mizuho and MUFG debated on where to start, with 130bp seen as too aggressive and 135bp as too generous, said a banker on the deal. So they opted to include both.
"We had the benefit of checking in with people yesterday, which gave us some comfort for coming with this range," said the banker, referring to the investor calls that were held on Tuesday. Fair value was estimated to be around 100bp, he said.
The capped size and the ESG helped in supporting demand. Books peaked at more than €4.1bn before finishing in excess of €3.2bn. Perhaps more telling than the attrition at the end was how demand continued to grow to €4.1bn from over €3.7bn when guidance of plus 105bp area was announced as it was clear that the deal was going to offer no concession. In the end, it came inside fair value.
Comparables the leads gave included some of the company's bonds, such as its €500m 4.125% March 2036s, which were at 108bp over swaps. They also referenced bonds from Deutsche Post, DSV and Brambles.
Proceeds will be used to finance and/or refinance the company's eligible green protects. The notes were issued under the company's €10bn euro medium-term note programme.
With an ECB policy meeting, there is unlikely to be any euro supply on Thursday. There probably won't be any on Friday either. But CBRE Europe Logistics Partners will be holding calls on those two days ahead of a debut €500m no-grow seven-year green bond deal via global coordinators BNP Paribas and ING, alongside active bookrunners ABN AMRO, Credit Agricole and HSBC.
The company is rated BBB+ stable by Fitch, which expects to rate the notes A—.