NBG seals first green deal as floodgates open
A diverse trio of banks hit the green bond market on Thursday, with National Bank of Greece growing its investor base with its green debut, while Mizuho Financial Group and BFCM won big books for further senior supply.
After a quiet second half of September, the euro FIG primary market began October with a bang as a flurry of deals were all well received. Most of the activity came in the senior market, with a clear green hue.
Banks were piling in to take advantage of an appealing window in a highly changeable market, taking confidence in credit's outperformance of equities this week, bankers said.
"All of today's transactions have gone very well and the rebound in terms of risk has been well received," said a DCM banker.
With the stage set, NBG brought forward the first green bond from a Greek bank.
Leads BNP Paribas, Commerzbank, Goldman Sachs, HSBC and Morgan Stanley opened books for the six-year non-call five senior preferred with initial price thoughts of 3.125% area.
Guidance was set at 2.875% (+/-7.5bp WPIR) and the size at €500m, before the deal was launched with a yield of 2.875% and a coupon of 2.75%. The book was last reported above €1.1bn (pre-rec).
At that level, bankers away from the leads said the deal offered a concession of around 12.5bp.
Notably, the new issue was priced with the same coupon as a €750m covered bond sold by NBG in 2017, which will mature later this month.
Bankers said that while markets have moved in the interim, the pricing of a new unsecured deal at the same level as the covered bond is a sign of the work NBG has done in recent years to restructure and strengthen its credit profile.
With the bank's paper having been upgraded since 2017, there is now greater real money participation and lesser hedge fund participation in its transactions, said a lead banker.
"It's been a strong performer and a lot of people are now getting involved," he said.
He added that the green element of the new issue brought additional focus, although its expected ratings of Caa1/B/CCC- meant some buyers could not participate.
"You're going to come up against a decent chunk of [ESG investors] that are ratings constrained, but it's been quite positive to hear how many investors have EM/HY portfolios in ESG which this could fit in," he said.
"Has it been a useful lever to get focus for the trade and develop the future investor base? For sure."
GREEN VALUE
For its part, Mizuho sealed a dual-tranche TLAC-eligible senior unsecured offering comprising a €500m five-year green tranche and a €1bn 10-year non-green tranche.
The green bond landed at 65bp over mid-swaps, inside IPTs of 85bp-90bp, on the back of around €2.9bn of demand (pre-rec).
The 10-year tranche was sold at 93bp over mid-swaps, down from IPTs of 115bp-120bp, on more than €2.4bn of demand (pre-rec).
Bank of America, HSBC, Mizuho and Natixis and ING were the bookrunners.
BFCM, meanwhile, priced a €750m seven-year green senior preferred at 47bp over mid-swaps.
Leads CM-CIC, Natixis and Societe Generale had initially offered the deal with IPTs of 70bp-75bp, gaining significant pricing momentum as demand surpassed €4.25bn (pre-rec).
Bankers said the two transactions clearly evinced the pricing benefit of issuing green deals, with BFCM's priced roughly flat to fair value and Mizuho's five-year landing roughly 5bp inside, they said.
"I think in senior unsecured is where green adds the most value right now, to lower concessions and add more attention," said a syndicate banker away from the deals. "Adding that on is a very smart move."