Swiss Franc Bond: Sandoz Group’s SFr750m dual-tranche bond

IFR Awards 2023
3 min read
Jonathan Penner

The medicine goes down

Sandoz Group brought its debut bond deal to the Swiss franc market in late October, mere weeks after it was spun off from Novartis, with a SFr750m (US$833m) dual-tranche offering.

Orders exceeded SFr900m from over 100 investors, with pricing coming tight of initial levels.

The global leader in generics and biosimilar medicines, rated Baa2 by Moody’s and BBB by S&P, had mandated BNP Paribas and UBS as joint bookrunners to arrange an investor call ahead of the deal, indicating an expected short and medium/long-term maturity. The call was extremely well attended for the Swiss market, with 45 investors joining in.

Sandoz is a well-known name, originally incorporated in 1886. It merged with Ciba-Geigy in 1996 to form Novartis, before being spun off last August.

Initial price thoughts came out for three and eight-year notes at mid-swaps plus 65bp–75bp and plus 100bp–110bp. Guidance was 5bp tighter on both tranches, both in minimum SFr350m sizes and to price in range.

Leads then set final terms for a SFr400m three-year bond at plus 65bp and a SFr350m eight-year note at plus 95bp. The bonds came respectively for the three and eight-year with coupons of 2.125% and 2.6%, yielding 2.12% and 2.583%, equivalent to 106bp and 152bp over the Swiss government curve.

The final amount raised was well above the SFr500m expected by leads and the issuer.

“Having initially targeted around SFr500m of issuance, the final result, and the incredible demand, stand as a testament to our new place in the Swiss market,” said Vincent Nippel, treasurer at Sandoz.

As a debut deal, there was no clear new issue premium. The bonds’ printing levels came very wide of its former parent's paper, given the difference in ratings: Baa2/BBB vs A1/AA–/AA–. Novartis's Swiss franc bonds maturing between 2025 and 2035 were all bid at I-spreads of 5bp to 10bp at the time.

The bonds were very well subscribed, especially for the Swiss market, with over SFr900m of orders from 78 investors in the shorter tranche and 94 in the longer, with demand skewed towards the latter. The bonds tightened in the secondary market.

The Swiss franc debut was followed swiftly the following month with Sandoz’s first offering in the euro market – a €2bn triple-tranche deal.

"We were very surprised and pleased with the reception from our domestic market with these debut bonds. The quick turnaround from incorporation, listing and getting our targeted Triple B rating to issuance in Swiss francs and, shortly thereafter euros, was solely due to the professionalism of all parties involved,” said Nippel.

To see the digital version of this report, please click here

To purchase printed copies or a PDF of this report, please email in Asia Pacific & Middle East and for Europe & Americas.