h3ECONDARYûLEVELSûNEVERûCHEAPENEDûUPû
fully to where primary deals were clearing,
they never fully adjusted,” the syndicate
banker said.
“It’s been hard to talk about concessions
but I would say that the primary market has
tightened towards secondaries, which is a
good dynamic.”NIB PULLS OUT ALL THE STOPS
FOR VIRUS FIGHTThe NORDIC INVESTMENT BANK brought a
“response” bond to market on Monday, the
lRSTûUNDERûAûFRESHLYûSETûUPûPROGRAMME ûINû
the latest sign that public sector issuers are
being called upon to stem the impact of the
fallout from the coronavirus pandemic.
33!ûISSUERSûSUCHûASûTHEûIFC and AFRICAN
DEVELOPMENT BANK have so far used their
existing frameworks to issue bonds to
counteract the economic consequences of
the virus.
However, NIB only had a green bond
framework in place. In order to issue a social
bond quickly, it opted to forgo an external
review that would have added another week
or two.
“They’ve done a tremendous job of
putting this [framework] together in such a
short time,” a lead manager said. “It was put
together in a matter of days.”
4HEû.)"ûRESPONSEûBONDSûWILLûlNANCEû
eligible projects to alleviate the social and
economic consequences of the pandemic in
the bank’s member countries and
eventually support the recovery process of
the countries.
4HEûDEALûISûONEûOFûTHEûlRSTûSOCIALûBONDSûTOû
lNANCEûEXPENDITUREûONûSOCIALûSECURITYûSUCHû
as unemployment, sickness and childcare.
.)"ûALSOûBUILTûINûSOMEûmEXIBILITYûINûTHEû
FRAMEWORKûTOûLETûITûISSUEûQUICKLYûBYûDElNINGû
broad categories including the public sector,
lNANCIALûSECTORûANDûTHEûREALûECONOMY ûTHATû
still gives visibility on the projects being
lNANCEDûANDûTHEIRûDISBURSEMENTû
“This is a good example of a frequent green
BONDûISSUERûDOINGûITSûlRSTûSOCIALûBONDûANDû
LEVERAGINGûITSû%3'ûFOCUSûWITHûINVESTORSûTHATû
know them,” said a banker close to the deal.
Leads BNP Paribas, Danske Bank, JP Morgan and
HSBCûMARKETEDûTHEûõBNûNO
GROWûATûBPûAREAû
over mid-swaps for a three-year transaction
though demand of more than €3.2bn - the
largest NIB book for a euro trade - meant that
the level was tightened to 6bp over.
“It’s very impressive,” another lead
manager said. “Most new deals are being
very well received right now and the
secondary performance of recent new issues
helps.”
After widening sharply, secondary
spreads are showing tentative signs of
stabilising and new issues have tightened.“There are price breaks here and not every
investor is active so you still need to be
cautious and have the correct pricing,” a DCM
banker said. “That’s what we’re learning from
every transaction that’s come to market.
“Having seen KfW and EIB, traders and
dealers can make an assessment on these
recent issues. You can’t extrapolate to
everything but for a good quality name like
NIB, achieving what they did, sends a good
signal to the market.”
.)"ûTRADITIONALLYûFAVOURSûTHEû53ûDOLLARû
market for issuance but bankers said
conditions have been more stable and the
market depth greater in the single currency.
“It feels like the euro market offers more
STABILITY vûTHEûlRSTûLEADûSAIDûh)FûYOUûLOOKûATû
the levels at which dollar deals have come,
it’s been very expensive.
“For those issuers who want to maintain
THEIRûCURVESûINû53ûDOLLARS ûTHEYûDONTûWANTûTOû
be seen as paying up and would prefer to
wait.”
AfDB, for example, recently paid 35bp
OVERûMID
SWAPSûFORûAû53BNûTHREE
YEARWALLONIA LIFTS EURO
SUSTAINABLE SECTORWALLONIA boosted meagre recent supply of
public sector green and social bonds in
EUROS ûPUTTINGûITSû3INGLEû!ûNAMEûTOûAûPAIRûOFû
longer dated offerings under its
3USTAINABILITYû"ONDû&RAMEWORK
The sub-sovereign’s deals comprised a
NEWûõMû
YEARûBENCHMARKûANDûAû
€200m tap of its May 2034 bond – one of the
lRSTûISSUESûLONGERûTHANûûYEARSûSINCEû
primary markets reopened after their near
closure in March. "ELlUS û$EUTSCHEû"ANK û(3"# û
ING and Natixis were lead managers.
Wallonia priced the new debt in line with
guidance at 45bp over interpolated OLOs,
and the reopening at plus 48bp. The tap was
marketed at the “high 40s area”.
Underscoring March’s spread widening,
Wallonia sold the original tranche of its May2034 sustainable bond at 36bp over OLOs. It
ISSUEDûTHEûlRSTûõMûALONGSIDEûAûSEVEN
YEARûOFûTHEûSAMEûSIZEûBACKûINû!PRILû
The region’s ability to attract demand for
the 2034 piece was “pretty impressive”, a
lead manager said. He noted that despite the
recent market turmoil it still offered a
hSIGNIlCANTLYûLOWERvûYIELDûTHANûATûLAUNCH
h&ROMûAûlXED
RATEûPERSPECTIVEûTHEûMARKETû
still makes sense for issuers.”
Although Wallonia remains an infrequent
issuer with “still small size aspirations”, the
deal package shows that funding remains
possible for such borrowers, he added.
“The reality is that with the market still
very busy even less frequent issuers are able
to get deals done.”FLEMISH COMMUNITY EXTENDS
BELGIAN RUNThe FLEMISH COMMUNITY kept the Belgian
MOMENTUMûGOINGûONû&RIDAYûWITHûAûõBNû
YEARûSUSTAINABILITYûBENCHMARK ûITSûlRSTû
market foray in a year.
“It has been a very active week for the
Belgian government and related entities. All in
all, they have managed to take out a combined
õBN ûWHICHûISûQUITEûSUCCESSFULûINûTHISû
market,” a banker away from the deal said.
Belgium laid the foundations on Tuesday
with its record-breaking €8bn seven-year
OLO. Wallonia followed in its slipstream the
NEXTûDAYûWITHûAûõMû
YEARûANDûõMû
May 2034 tap.
The Flemish Community started
marketing at interpolated OLOs plus the
40bp area. One lead said it was not easy
spotting fair value given current conditions.
“Looking at the most recent Belgian
issues, secondary trades, and the broader
regional European markets, we saw fair
value in the context of OLOs plus 25bp,” he
said.
7ITHûORDERSûEXCEEDINGûõBNûLEADSûSETû
THEûSPREADûATûBP ûSUGGESTINGûAûlNALû
CONCESSIONûOFûAROUNDûBPInternational Financing Review April 4 2020 33BONDS SSARALL SOVEREIGN BONDS IN EUROS
BOOKRUNNERS: 1/1/2020–31/3/2020
Managing No of Total Share
bank or group issues €(m) (%)Excluding ABS/MBS.
Source: Refinitiv SDC code: N41 JP Morgan 16 12,580.97 12.7
2 SG 8 7,744.22 7.8
3 BNP Paribas 12 7,633.62 7.7
4 Citigroup 9 6,838.46 6.9
5 HSBC 9 6,824.91 6.9
6 Goldman Sachs 10 6,742.95 6.8
7 Credit Agricole 6 6,259.44 6.3
8 Barclays 10 5,296.91 5.4
9 Santander 5 5,047.48 5.1
10 BofA Securities 10 4,749.92 4.8
Total 31 98,991.69MUNICIPAL, CITY, STATE, PROVINCE ISSUES IN EUROS
BOOKRUNNERS: 1/1/2020–31/3/2020
Managing No of Total Share
bank or group issues €(m) (%)Excluding ABS/MBS.
Source: Refinitiv SDC code: N71 UniCredit 17 7,288.19 22.6
2 JP Morgan 10 3,029.87 9.4
3 DGZ-DekaBank 16 2,905.93 9.0
4 BayernLB 9 2,582.71 8.0
5 Barclays 9 2,261.03 7.0
6 Nord/LB 14 2,227.24 6.9
7 Deutsche Bank 10 1,700.02 5.3
8 HSBC 10 1,614.80 5.0
9 DZ Bank 9 1,161.64 3.6
10 Commerzbank 5 1,056.00 3.3
Total 47 32,292.796 IFR Bonds 2327 p 25 - 65 .indd 33 03 / 04 / 2020 20 : 28 : 58