2020-04-04 IFR Magazine

International Financing Review April 4 2020 43

BONDS CORPORATES

#REDIT3IGHTSûANALYSTSûHAVEûANûOUTPERFORMû

view on the name given the opportunity

for spread pick-up.

BP said on Wednesday that the disposal

PROGRAMMEûTARGETEDûBYûMID

ûREMAINSû

on track but completion of deals already

announced may face delays. The company

also cut its 2020 spending plan by 25% and

WILLûREDUCEûOUTPUTûFROMûITSû53ûSHALEûOILûANDû

gas business.

AIRBUS FLIES AFTER STARTING

WITH BIG PREMIUM

AIRBUS demonstrated that investors have

little fear about participating in new issues

even from sectors badly affected by the

coronavirus, as accounts put in more than

õBNûOFûORDERSûFORûTHEûISSUERSûõBNû

triple-trancher.

The air travel industry is one of the most

vulnerable to the developing crisis, with a

number of airlines struggling with their

business.

But the planemaker cast aside any doubts

about its appeal to investors as it headed a

busy day in Europe’s corporate bond market

on Tuesday.

,EADSûOPENEDûBOOKSûONûAûlVE

YEARûATû

swaps plus 235bp area, an eight-year at plus

BPûAREAûANDûAû

YEARûATûPLUSûBPûAREA

In a sign of the premiums on offer at IPTs,

leads saw the company’s bonds from April

ûUPûTOû-AYûûINûAûRANGEûSTRETCHINGû

FROMûBPûTOûBP

A banker away put the starting

concession at around 75bp, a level he said

REmECTEDûTHATûTHEûMOSTûRESILIENTûNAMESûTOû

the economic effects of the novel

coronavirus are starting around 50bp back,

and the most affected sectors are

BEGINNINGûASûMUCHûASûBPûBACK

!TULû3ODHIûGLOBALûHEADûOFûDEBTûCAPITALû

markets at Credit Agricole, one of the global

coordinators, said that the market

volatility is a short-term shock that Airbus

should be able to navigate, with premiums

REmECTINGûHOWûPRICINGûHASûCHANGEDûINû

recent weeks.

“Airbus is a strongly rated issuer, with a

strong market position and strong

UNDERLYINGûBUSINESSûMODELvûSAIDû3ODHI

“They are pragmatic and are being

realistic. This is a top-tier issuer and you can

see the market buys the story.”

The other global coordinators are BNP

Paribas, HSBC, JP Morgan and Societe Generale.

UniCredit, Santander and Natixis are active

bookrunners.

Airbus was able to tighten all tranches by

BPûLANDINGûTHEûlVE

YEARûATûBPûTHEû

EIGHT

YEARûATûBPûANDûTHEû

YEARûATû

240bp.

In a demonstration of the bid for

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THEû

YEARûWITHûMOREûTHANûõBNûOFû

orders.

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4HEûlVE

YEARûANDûEIGHT

YEARûWEREûBOTHû

€750m, with interest of more than €3bn and

€2.7bn, respectively.

Airbus is grappling with labour and

supply chain shortages and may only be able

TOûRESTOREûAIRCRAFTûPRODUCTIONûTOûSOMEû

20% of normal levels for now because of

partial shutdowns, industry and union

sources said.

Airbus and other major aerospace

companies have been left in no doubt that

the French government sees it as a

strategically important sector and should

not risk collapse of the supply chain by

closing operations completely, two senior

sources said.

4HEûISSUERûISûRATEDû!ûBYû30ûWHICHûPUTû

the company on negative watch on March

27 due to a slowdown in aircraft deliveries

due to the effects of the pandemic.

Airbus recently said it had secured a

õBNûCREDITûFACILITYûASûITûSEEKSûTOûBOLSTERû

liquidity.

4HEûlNANCINGûWHICHûISûINûADDITIONûTOûTHEû

company’s €3bn revolving credit facility, is a

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facility.

Other measures being taken by the

company to strengthen its balance sheet

INCLUDEûSCRAPPINGûTHEûûDIVIDENDûWITHûANû

OVERALLûCASHûVALUEûOFûõBNûANDûSUSPENSIONû

of a voluntary top-up in pension funding.

Its available liquidity is now around

€30bn.

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understanding that Airbus plans to maintain

production and reduce the group’s cash

REQUIREMENTSûTHEûlRMûSAIDûTHEûCOMPANYSû

CREDITûPROlLEûCOULDûWEAKENûTOûAûLEVELûTHATûISû

no longer consistent with its ratings.

It did say however that Airbus’s liquidity

WASûEXCEPTIONALûANDûTHATûITûHASûAûõBNû

cushion under its stress scenario before it

breaches its liquidity thresholds for the

current ratings.

30ûWILLûRESOLVEûITSûWATCHûONCEûITûHASû

more clarity on when Airbus can resume

aircraft deliveries in meaningful volumes,

and how the market situation will affect the

COMPANYSûLIQUIDITYûANDûlNANCIALûPOSITION

Airbus is rated A2 by Moody’s with a

stable outlook.

The company is also part of a 27-strong

team of industrial and engineering

companies that has received an order from

THEû5+ûFORûûHOSPITALûVENTILATORS

The consortium, which was asked in mid-

March to retool factories that produce

everything from aircraft engines to the

world’s fastest racing cars, has not said

when the ventilators will be ready for use in

hospitals.

STERLING

STERLING PROVES ITS VIABILITY

The sterling market began to show strong

signs of life last week, with domestic and

international borrowers raising funding in

the UK currency.

“The market has been slower than euros

to come back, for sure,” said a syndicate

banker. “The investors are perhaps more

selective, but with yields where they are,

there is good demand, especially at the long

end.”

A lead on EXPERIAN@Sû"AA!nûRATEDû

YEARû

said the maturity allowed the issuer to

differentiate its deal from some of the

shorter-dated transactions in the euro

corporate market.

“The sterling market is less obvious right

now because the availability of liquidity is

bit more dubious in that market,” he said,

“but Experian is a name that traditionally

works very well there.”

The credit score company only has a

single short-dated sterling note outstanding,

SEENûATû'ILTSûPLUSûBPû4HEûNEWûISSUEûWASû

initially marketed at the plus 300bp area.

The lead said that was around 50bp back of

fair value.

“You can’t be too punchy in sterling,”

he said. “But we didn’t want to start a

million miles back and do that kind of

execution.”

Experian tightened pricing by 20bp and

sold a £400m transaction at 280bp on books

exceeding £2.2bn.

Prior to last Tuesday, the last trade in the

sterling corporate market came from Diageo

(A3/A–) on March 24, which sold a £300m

March 2029 at Gilts plus 255bp, alongside

two euro notes.

Last Thursday, VOLKSWAGEN FINANCIAL

SERVICES proved that the sterling market, like

the euro primary, is open to auto credits but

had to offer a substantial spread to attract

buyers.

The issuer, rated A3/BBB+, brought in

more than £700m of orders. The spread at

IPTs on the October 2025 was 445bp area

over Gilts, but with enough demand leads

landed it at 425bp, broadly inline with

where it would fund in euros according to a

lead.

Leads also managed to increase the size to

£350m from an expected £300m.

HOUSING ASSOCIATIONS SUPPLY

THE LONG END

Housing associations proved well suited to

the growing demand for longer-dated

sterling assets, with SANCTUARY CAPITAL (A2/

A+) and OPTIVO (A2) both stepping into the

market last week.

6 IFR Bonds 2327 p 25 - 65 .indd 43 03 / 04 / 2020 20 : 29 : 00