SSAR
US DOLLARS
CPPIB OVERCOMES VIRUS VOLATILITYCANADA PENSION PLAN INVESTMENT BOARD
shrugged off a challenging environment
last Wednesday, with the international
lXED
RATEû53ûDOLLARûBONDûMARKETûOTHERWISEû
DESERTED ûTOûPRICEûITSûlRSTûlVE
YEARûOFFERINGû
in the currency since 2018.
Even so, the deal’s two-day delay
and reduced size underscored the
volatile conditions in asset markets as the
global spread of coronavirus drives
investors into a risk-off stance. Some other
public sector names have pulled deals that
were expected, though not announced
formally.
Issuing through its CPPIB Capital
vehicle, the Triple A crown corporation
raised US$1bn in a no-grow deal. Previous
THREEûANDûlVE
YEARû#00)"ûDOLLARûBONDSû
have been for US$2bn.
Similarly, although the offering
attracted over US$1.3bn of demand, lead
managers Barclays, Goldman Sachs, JP Morgan
and Royal Bank of Canada were unable to
tighten its spread.
They priced it in line with the mid-swaps
plus the 16bp area initially indicated.Oversubscription in “probably the
trickiest market we’ve had in a couple of
years” was “a good result”, a lead manager
said. “Given the huge volatility, to get this
priced shows it worked well.”
Syndicate sources away from the deal
were positive about it despite the delay. “It
would be easy to say it struggled because it
was announced on Friday and didn’t come
on Monday. But in our view it wasn’t down
to the market backdrop entirely but also
some strategy,” said one.
“They were trying to drive a tight price
and ally themselves to the Dutch and Nordic
agencies, rather than Canadian provinces
and provincial pension plans. This is
probably the tightest they’ve come to those
agencies, so in that sense it’s a good
outcome.”
(EûCITEDûAû.7"û"ANKûlVE
YEARûTRADINGûATû
plus 14bp last Wednesday, for example.
Although the spread was not tightened in
MARKETING ûTHISûREmECTEDûANûAGGRESSIVEû
initial level, sources said.
“They never move their dollar deals more
than a basis point and the fact that this one
DIDNTûMOVEûISûNOTûDAMNINGû
ûITSûMOREûJUSTû
how tight it was to start,” said the syndicate
OFlCIALûAWAY
!SûAûMAJORûINVESTORûITSELF û#00)"Sû
understanding of buyer preferences
INmUENCEDûITSûAPPROACHûTOûTHEûDEALûh4HEYû
know how they like to be treated as an
investor. Investors like certainty, to be able
to prepare and plan. So although CPP werenot forced into the market on Monday they
take their commitment to issue seriously - in
good times and challenging times,” the lead
said.
Equally, though, the issuer took a
different approach than previously in
response to the challenging conditions.
“They realised there was a bit of stress
and volatility in the market and wanted to
give comfort to investors over size. They
have been establishing liquid benchmarks
INûlVEûANDûALSOûTHREEûYEARS ûBUTûADJUSTEDû
strategy rather than ploughing on,” the
lead said.
“The no-grow probably helped create
some momentum,” said a second syndicate
source away from the transaction.
CPPIB’s previous US dollar deal last
October was also a no-grow US$1bn.
However, that was in the shallower 10-year
sector.
4HEûDEALûALSOûBENElTEDûFROMûTHEûRARITYûOFû
Canadian sovereign risk in international
currencies. The sovereign is an infrequent
issuer while several crown corporations,
such as Business Development Bank of
Canada and the Canadian Wheat Board,
ceased issuing in their own names many
years ago. Only Export Development Canada
remains active.
EDC, whose debt carries “the full faith
and credit of the Government of Canada”,
trades tighter than CPPIB. Its February 2024
benchmark was bid at plus 11.3bp,
according to Tradeweb.International Financing Review February 29 2020 27BONDS SSAREUROPEAN SOVEREIGN BOND AUCTION RESULTS WEEK ENDING FEBRUARY 29 2020
Pricing date Issuer Size Coupon (%) Maturity Average Yield (%) Bid-to-cover
Feb 25 2020 Italy €2.25bn 0.00 Nov 29 2021 -0.143 1.55
Feb 25 2020 Italy (€i) €900m 0.40 May 15 2030 0.31 1.92
Feb 25 2020 Italy (€i) €600m 1.25 Sep 15 2032 0.38 2.82
Feb 25 2020 UK £3.25bn 0.875 Oct 22 2029 0.512 2.16
Feb 26 2020 Germany €3.223bn 0.00 Apr 11 2025 -0.69 1.04
Feb 27 2020 Italy €2.5bn 0.35 Feb 1 2025 0.36 1.36
Feb 27 2020 Italy (CCTeu) €1bn 0.301 Apr 15 2025 0.47 1.66
Feb 27 2020 Italy €4bn 0.95 Aug 1 2030 1.00 1.26
Source: IFRALL INTERNATIONAL US$ BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)Including Euro, foreign and global issues. Excluding equity-related debt,
US Global ABS/MBS.
Source: Refinitiv SDC code: O11 Citigroup 150 35,122.76 8.6
2 JP Morgan 147 35,031.55 8.6
3 BofA 123 27,475.28 6.7
4 Goldman Sachs 103 24,511.68 6.0
5 Morgan Stanley 76 24,345.24 6.0
6 Barclays 102 22,259.75 5.5
7 Deutsche Bank 84 14,774.04 3.6
8 HSBC 86 13,566.55 3.3
9 Wells Fargo 59 13,185.03 3.2
10 RBC 55 13,123.22 3.2
Total 466 407,064.82ALL INTERNATIONAL BONDS (ALL CURRENCIES)
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)Including Euro, foreign, global issues. Excluding equity-related debt,
US Global ABS/MBS.
Source: Refinitiv SDC code: J11 JP Morgan 232 67,756.43 8.0
2 Barclays 210 54,731.29 6.4
3 Citigroup 211 54,207.50 6.4
4 BofA 179 44,310.95 5.2
5 HSBC 191 41,763.24 4.9
6 Goldman Sachs 145 39,962.34 4.7
7 BNP Paribas 141 38,791.30 4.6
8 Deutsche Bank 163 37,508.56 4.4
9 Morgan Stanley 105 32,895.75 3.9
10 Credit Agricole 123 30,204.80 3.6
Total 1,022 849,471.84ALL BONDS IN EUROS
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues €(m) (%)Including Euro-preferreds. Excluding equity-related debt,
US Global ABS/MBS.
Source: Refinitiv SDC code: N11 JP Morgan 75 26,230.70 8.1
2 BNP Paribas 88 23,974.94 7.4
3 Barclays 83 22,028.81 6.8
4 Credit Agricole 67 19,640.30 6.1
5 HSBC 69 19,314.90 6.0
6 SG 56 18,743.81 5.8
7 Deutsche Bank 67 16,636.67 5.1
8 UniCredit 66 15,107.47 4.7
9 Citigroup 50 13,660.40 4.2
10 BofA 44 12,707.75 3.9
Total 330 324,508.866 IFR Bonds 2322 p 25 - 43 .indd 27 28 / 02 / 2020 19 : 15 : 31