Banca Transilvania decided that Friday was go day for its four-year non-call three senior non-preferred bond, and the move more than paid off as it upsized the trade to €500m.
The bank, Romania's largest lender, had initially gone with IPTs of 9.25%–9.5% for a minimum €300m size, but was able to drive the price down to launch at 9%.
Despite the high headline yield on offer, it did not necessarily look like a pricing outlier in the view of some investors.
"Within such a universe as Poland, mBank's 2027 SNP is trading at 8.5%–9% yield-to-worst," said Kasparas Subacius, fund manager at CEE investment firm INVL Asset Management.
"So from this from this perspective BT's 9.25%–9.5% IPT does not look too wide any more, given that mBank's green bond holds an investment-grade rating and Commerzbank is mBank's main shareholder."
mBank is rated BBB– by S&P and Fitch, while BT is rated BB+ by Fitch, with the bond expected to be rated BB.
While BT's peer group for relative value is quite established in terms of regional CEE banks, Ruslan Gadeev, senior financial analyst at Raiffeisen Bank International, said there was a lack of major Romanian competitors given the reliance on the domestic market, which was unable to provide the capacity of the international market but does provide cheaper funding.
"From a credit risk side, the issuer looks fundamentally strong," said Subacius. "A dominant market share, good profitability and efficiency – strong double-digit return on equity and cost-to-income ratio below 50% for the last few years – quite a robust balance sheet, low leverage and strong capitalisation all look nice and support the bank's valuation."
Still, the appearance of an MREL-related bond from a CEE lender on a Friday was not perhaps the most anticipated trade, given that small, illiquid deals from CEE banks have proved a difficult sell even during boom times for the market. The euro FIG market, indeed, has only been creaking open following the SVB and Credit Suisse failures.
The euro bank senior unsecured market had for weeks been solely the preserve of national champion lenders until Permanent TSB and Jyske Bank proved during the week that smaller or less-established issuers also have market access, and then on Thursday the UK's OSB Group got bank Tier 2 issuance back underway.
But BT was able to drum up demand of more than €850m. The bond had received an expression of interest from a supranational international financial institution with a significant anchor order expected. The EBRD is a minority shareholder in BT.
Gadeev had calculated BT as sitting around €900m–€1bn below its MREL target, before Friday's deal, meaning there could well be follow-on international trades this year.
"[CEE] banks had seen themselves on a good issuance track at the start of the year (around €2.6bn placed in January–February) before being interrupted by the US banking sector turmoil," said Gadeev. "We see the premium for CEE risk on the international marketplace somewhat subsiding again now, though it remains stubbornly high in the historical context."
Morgan Stanley was global coordinator for the bond.