Big, bold debut
Oil and gas group Wintershall Dea set a record in September when it priced the largest ever bond offering from a debut corporate borrower.
To land the €4bn four-part bond, leads Barclays, Bank of America, JP Morgan and Societe Generale had to navigate volatility in oil prices and a surge in global geopolitical tensions.
Wintershall Dea was formed in May from the combination of BASF's oil and gas unit Wintershall with Dea, a vehicle of Russian billionaire Mikhail Fridman.
The company's offering came after that merger and ahead of an expected IPO.
At the time of issuance, the four-month-old company hadn't had any prior access to capital markets.
Leads decided to throw the investor net wide, targeting the US dollar and euro bond markets for Wintershall's marketing exercise.
But after overwhelming interest from European investors, the company focused only on a euro bond transaction.
"This was a vintage year for corporates," said Marco Baldini, head of European bond syndicate at Barclays. "For repeat and established issuers it was an accommodative market. But what stood out were the special cases, the debut issuers. Wintershall Dea was a tough credit in a tough industry but we got it all done in euros without needing dollars. It was a fantastic deal."
Wintershall Dea's debut included four fixed-rate maturities: four, six, nine and 12-year bonds.
The company targeted intermediate maturities to take advantage of investor demand for positive yields at a time when shorter euro-denominated investment-grade corporate tranches had dropped into negative-yielding territory.
It wasn't an easy ride for syndicate bankers, who were facing some relatively rocky conditions for the debut bond.
Just before the issue, oil prices surged after an attack on Saudi Arabian processing facilities halved the kingdom's production.
And investors had already been targeted with a record amount of investment-grade supply in September.
But for a new credit of Wintershall Dea's size to suddenly become available was very attractive for investors. And the company had also sent strong messages around controlling its costs and its strong commitment to controlling leverage.
A combined order book of €10.6bn allowed Wintershall Dea to take out €4bn.
Such demand, which was evenly split across the maturities, allowed leads to tighten pricing by 25bp on all four tranches.
A €1bn four-year priced at 85bp over swaps to yield 0.452%, a €1bn six-year priced at 115bp to yield 0.84%, a €1bn nine-year priced at 145bp to yield 1.332% and a €1bn 12-year priced at 175bp to yield 1.823%.
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