for shorter maturities too after a fortnight of
demand being skewed in favour of longer
tenors.
The Spanish travel and tourism IT
provider benefited from a lack of competing
euro supply and sold last week’s most
oversubscribed trade, books topping €6.1bn
for the total €1.5bn size.
“Today was definitely not a day for
opportunistic trades,” one lead said. “We’ve
already reached a good level of supply this
week and everybody knew Amadeus would
come today. People probably didn’t want to
be head-to-head with this trade, which offers
decent new-issue premiums despite being
acquisition-related.”
“We’ve also seen some accelerated price
sensitivity in the books recently, so it
wouldn’t have been the right day to try and
shave off a few basis points.”
The most notable order drop came last
Tuesday, courtesy of Telefonica’s €1bn
seven-year - interest climbed all the way to€2.6bn, before slumping to €1.5bn as leads
shaved 20bp off IPTs. Bonds on Thursday
were bid 1bp back from reoffer, according to
Tradeweb prices.
Books for Amadeus, on the other hand,
swelled from €4.5bn at the first update to
over €6.1bn at final terms. Each no-grow
€500m tranche printed 15bp inside the
initial talk.
The lead banker saw fair value at 40bp,
52bp and 73bp, implying respective
premiums of 5bp, 8bp and 12bp on the 3.5-
year FRN, five-year fixed and eight-year fixed
legs.
Given that the Amadeus curve consists
of very short paper, a list of comparables
sent by the banks also included bonds
from Capgemini, which is similarly rated
at BBB.
Amadeus November 2021s were spotted
at 25bp pre-announcement, while
Capgemini July 2023s were at 44bp and its
October 2024s at 58bp.Proceeds will fund the 100% debt-financed
acquisition of hotel technology provider
TravelClick for US$1.52bn announced in August.
BNP Paribas, Credit Agricole (B&D), JP
Morgan, MUFG and UniCredit were active
bookrunners.HEINEKEN DEMONSTRATES TRIPLE
B THIRSTHEINEKEN had no difficulty finding demand
for its €1.25bn dual-trancher last Monday, as
investors lapped up its Triple B risk after a
flood of Single A credits the previous week.
With no competing supply, the Baa1/BBB+
rated Dutch brewing company attracted
around €3bn of orders at the final terms,
from over €3.3bn earlier in the session, with
a skew towards the 12.5-year tranche.
The strong demand enabled leads to
upsize the trade from an expected €500m on
both the 8.5-year and 12.5-year legs to a final
€600m and €650m, respectively.32 International Financing Review September 8 2018No signs of indigestion as corps pummel market
n CORPORATES Bankers sanguine despite widening secondaries
Borrowers swarmed to the market last Wednesday
to print €3.95bn in euro paper, but modest tranche
sizes and a range of tenors, ratings and sectors
helped the supply get absorbed.
Bankers were surprised by the number of
deals although sanguine about indigestion risks.
“Having so much in one day is not ideal to get
that investor focus but I don’t think there are any
signs of congestion as of yet,” one said.
“And I doubt this week’s level of supply is
indicative of the whole month. Last year around
€30bn was printed, and I think we’ll be short of that
given a few trades already came in late August.”
Bringing the day’s largest trade was ORANGE,
confirming long-end appetite with a €3bn book
skewed to the 12-year leg of its €2bn dual-
trancher. The deal had originally been marketed
as an expected €1.5bn combined size.
A banker away saw Baa1/BBB+/BBB+ Orange
starting slightly cheap versus its curve but said
it made sense given that peer Deutsche Telekom
has been trading wider at the longer end.
Pre-mandate levels of swaps plus 37bp for
its May 2025s and 69bp for its January 2030s
implied fair value at around 40bp on the €800m
seven-year and 73bp on the €1.2bn 12s.
The trade launched with 13bp and 12bp
concessions, in line with recent corporate
offerings.SEVEN-YEAR FOCUS
Two more also favoured sevens, but there was
not much else in common between ARCHER-
DANIELS-MIDLAND and SKF.The former, an A2/A rated US food processing
and commodities trading company, started
marketing at swaps plus 60bp-65bp, having
held an investor call the day before for a single
or dual-tranche six to 10-year outing.
“They had this call and decided overnight
to go for a seven-year, which is a pretty normal
maturity in this market,” said one lead.
“Extrapolating fair value is not that
simple given they have one fixed euro bond
outstanding, and Single A curves tend to be
pretty idiosyncratic. People have been looking at
a broad range of comparables.”
One was Cargill, which has February 2022s
at 27bp. ADM’s June 2023s were at 32bp pre-
announcement, according to Tradeweb.
The spread was set at 50bp, which the first
banker away said was some 10bp back of fair
value.
Meanwhile, Sweden’s SKF priced its no-grow
€300m seven-year at swaps plus 77bp.
The Baa2/BBB bearing and seal
manufacturing company was last in the market
in November 2015 with €500m December
2022s. Those were quoted at plus 40bp early
last Wednesday.
“SKF hasn’t been in the market for a while,
that’s why we flagged it to investors yesterday.
Fair value is hard to pin given they only have
short-dated bonds. And the €300m size will be
a good test,” said a lead banker ahead of pricing.
The trade, which bankers away said looked
cheap at IPTs of 90bp-95bp, had a pre-
reconciliation book of over €1bn.“I think it will be today’s most oversubscribed
deal,” one of them correctly predicted.SUEZ OUTPERFORMS STEDIN
Comparisons were more easily drawn between
SUEZ and STEDIN, two Single A utilities opting to
go longer on the curve.
While both €500m trades landed at 60bp
over swaps with 12bp premiums, Suez found
over €1.2bn of interest, having started wider and
gone longer (to 12 years) than Stedin (10 years).
Still, the Dutch company attracted a €1bn
book for what was its second senior fixed
offering.
Last October, it printed a €500m eight-year,
part of a dual-trancher, at swaps plus 30bp.
That was quoted at 37bp pre-announcement,
before widening to 49bp.
It was not all about euros, BMW returning only
a fortnight after printing a €1.75bn two-parter
with a £350m five-year, landing 10bp inside
guidance at Gilts plus 95bp.
“Issuers are just taking advantage of the
high cash balances investors have, all feeling
the same pressure to come when the market’s
good,” the second lead said.
“So far the supply has been managed well
and concessions haven’t really gapped wider.
The secondary market feels a little soggy but it’s
because people aren’t willing to add there when
the primary market is so active. But indigestion
may be a problem if we have a few more weeks
like that.”
Pauline Renaud6 Bonds 2250 p25-55.indd 32 07/09/2018 19:29:59