Pricing began at mid-swaps plus 130bp area
for the no-grow transaction. Books swelled to
about €3.5bn within three hours, allowing
pricing to be revised to plus 105bp-110bp.
Books grew a further €1bn, enabling the
issuer to print at plus 100bp. “Ultimately
this resulted in the issuer being able to price
at a 0bp-5bp new issue concession,” said the
lRSTûLEAD
Cadent (Baa1/BBB+/BBB+) achieved a
better subscription level than Snam, which
got €2.4bn of demand.
“We received sizeable orders from a
number of ESG-focused investors for whom
#ADENTSûTRANSITIONûTRADEûlTSûCERTAINû
dedicated portfolios, as well as their broader
sustainability strategy,” said the second lead.
He said that many of these investors have
mEXIBILITYûINûTHEIRûPORTFOLIOSûTOûINVESTûINû
sectors where corporates cannot issue green
bonds and to diversify away from green
debt, which is usually skewed towards
Single A utilities.
Cadent supplies gas to more than 10
million UK households. It aims to reduce its
greenhouse gas emissions by 80% by 2050
from a 1990 baseline.
Proceeds from the transition bonds will
back projects that are part of Cadent’s
broader strategy to eventually move towards
“100% low carbon”.
It has also pledged not to put proceeds
from its transition debt issues towards the
expansion of its gas network.
Many of the transition bond deals seen so
far have been criticised for a lack of real
transition.
Hong Kong power producer Castle Peak
Power and Snam, both heavy burners of
FOSSILûFUELS ûWEREûTHEûlRSTûISSUERSûINûTHEû
format, in 2018 and 2019, respectively.
Brazilian meat producer Marfrig followed
with a deal last August - even though beef
production is considered to be the biggest
single contributor to deforestation globally.
BNP Paribas was sole transition framework
structuring advisor on Cadent, andbookrunner alongside Credit Agricole, Mizuho
and NatWest.VATTENFALL’S SECOND GREEN COMING
FUELS INVESTOR DEMANDVATTENFALL last Thursday returned to the
market with its second green debt offering -
a €500m October 2025 senior unsecured
bond that attracted substantial demand.
“It is a very uncontroversial trade and a
no-brainer buy for a lot of investors,
particularly ESG-focused accounts,” said
Arthur Krebbers, the head of sustainable
lNANCE ûCORPORATES ûATû.AT7ESTû-ARKETS
“If you think about quality of issuers and
projects that you can possibly invest in with
a carbon impact, it doesn’t get much better
than Nordic and renewables. This is a very
well-developed and understood part of the
market.”
Vattenfall began planning for the long
lVE
YEARûGREENûISSUEûPRIORûTOûTHEûRECENTû
coronavirus-related turmoil and had been
biding its time. The market conditions
offered a favourable opportunity, according
to Johan Gyllenhoff, Vattenfall’s group
treasurer.
“We were a bit opportunistic. ... We have
lNANCINGûNEEDSûAHEADûOFûUSûINûûBUTû
6ATTENFALLûISûNOTûINûAûHURRYûTOûRElNANCEûITSELFû
right now. If the market hadn’t given us this
window, we could easily have waited
another half year,” he said.
4HEûISSUERûTOOKûITSûlRSTûSTEPSûINûTHEûGREENû
sector in 2019 following a 10-year absence
from the senior bond market. That €500m
June 2026 deal was quoted around 43bp
over mid-swaps on Tradeweb last Thursday.
,OOKINGûATû6ATTENFALLSûMATURITYûPROlLE û
the company did not have any bonds in the
lVE
YEARûRANGEû4HEûNEWûGREENûBONDûlTSû
between the June 2026s and an April 2024
issue that was seen at plus 39bp on
Tradeweb.
-ARKETINGûFORûTHEûLONGûlVE
YEARûGREENû
paper started at mid-swaps plus the 75bparea. With books peaking around €4bn
WITHINûTWOûHOURS ûGUIDANCEûWASûRElNEDûTOû
45bp-50bp.
4HEûlNALûSPREADûWASûSETûATûTHEûTIGHTûENDûOFû
that range and the order book dropped to
some €3.5bn. For comparison, Vattenfall
garnered over €3.9bn of orders for its June
2026 green bond last year.
“We are getting to the stage now where,
when pricing new debt issues, the
sustainability component is starting to have
an impact on achievable pricing outcome.
We are seeing more aggressive pricing levels
for green bonds than for similar regular
bonds,” Krebbers said.
Gyllenhoff said: “We ended up in the
lower part of the guidance range, so it is
natural to see a few investors leave. But an
approximately €3bn book for a €500m deal
ISûSTILLûAûVERYûGOODûSUBSCRIPTIONû;RATE=v
A source close to the deal said the new-
issue concession was about 3bp. He also
deemed it fair to say there was an element
of price sensitivity among some investors.
“This bond is not eligible for the ECB’s
CSPP programme, so we don’t have that sort
of almost insensitive buyer in the order
book,” they said.
According to Krebbers, Vattenfall was
“another proof point not just of the
attractiveness of the credit story,
PARTICULARLYûINûTHEûCURRENTûCORONA;VIRUS=û
situation, but also the appeal of issuing
UNDERûAûSUSTAINABLEûlNANCEûFRAMEWORKv
4HEûGREENûELEMENTûHADûAûSTRONGûINmUENCEû
on the demand dynamics, according to
Gyllenhoff, who said the order book was
predominantly composed of very dark green
investors.
“What is interesting in the framework of
Vattenfall is that they also include research
ANDûDEVELOPMENTû4HEYûAREûlNANCINGûTHEû
HYBRIT project which looks at making fossil-
fuel-free steel, which is an important and
exciting initiative to support,” said Krebbers.
The green market is supporting more
high-technology and R&D projects, andInternational Financing Review March 7 2020 31BONDS CORPORATESALL INV-GRADE US CORPORATE BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt, ABS/MBS, all foreign issues, global issues
and non corporates.
Source: Refinitiv SDC code: F6a1 BofA 35 7,493.09 13.8
2 JP Morgan 37 7,415.01 13.7
3 Citigroup 25 4,116.81 7.6
4 Goldman Sachs 14 4,086.48 7.5
5 Barclays 18 3,785.13 7.0
6 Morgan Stanley 13 3,637.00 6.7
7 Wells Fargo 23 3,290.89 6.1
8 Mizuho 14 2,061.20 3.8
9 Deutsche Bank 10 1,849.47 3.4
10 HSBC 9 1,679.65 3.1
Total 62 54,229.50ALL US INVESTMENT GRADE CORPORATE DEBT
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)Source: Refinitiv SDC code: F91 JP Morgan 104 29,253.83 11.7
2 BofA 97 23,519.99 9.4
3 Morgan Stanley 63 23,408.99 9.3
4 Citigroup 84 21,993.74 8.8
5 Goldman Sachs 54 18,559.67 7.4
6 Barclays 44 12,765.51 5.1
7 Wells Fargo 55 12,115.01 4.8
8 RBC 38 8,601.75 3.4
9 MUFG 37 7,571.59 3.0
10 Deutsche Bank 30 7,466.01 3.0
Total 208 250,728.14ALL CORPORATE BONDS IN EUROS
BOOKRUNNERS: 1/1/2020 TO DATE
Managing No of Total Share
bank or group issues €(m) (%)Excluding equity-related debt. FIGs, ABS/MBS.
Source: Refinitiv SDC code: N81 Barclays 22 6,060.55 7.8
2 JP Morgan 28 5,414.43 6.9
3 BNP Paribas 36 5,379.44 6.9
4 HSBC 24 4,988.29 6.4
5 Deutsche Bank 25 3,914.65 5.0
6 Citigroup 21 3,588.08 4.6
7 SG 22 3,184.26 4.1
8 UniCredit 23 3,089.99 4.0
9 Credit Agricole 18 2,689.36 3.4
10 BofA 17 2,607.70 3.3
Total 99 78,021.556 IFR Bonds 2323 p 25 - 53 .indd 31 06 / 03 / 2020 19 : 18 : 06