International Financing Review September 8 2018 41BONDS HIGH-YIELD
There were little fireworks for WUESTENROT
BAUSPARKASSE’s €250m September 2026
covered issue. It was priced at 4bp through
mid-swaps on books over €340m, the tight
end of the less 2bp area guidance.
Commerzbank, DZ Bank, LBBW and UniCredit
were lead managers.COFF RETURNS FOR FOURTH COVERED
OF 2018COMPAGNIE DE FINANCEMENT FONCIER (CoFF)and
UNITED OVERSEAS BANK were among the lenders
to raise covered debt last week - in the
former’s case its fourth benchmark this year.
Its €1bn 10-year (Aaa/AAA/AAA) priced at
8bp over swaps, inside the initial marketing
level of 12bp area. Books passed €1.4bn via
leads Banca IMI, DekaBank, Danske Bank,
Natixis, NatWest Markets and Santander.
“CoFF for me is the really interesting one,
especially as they’ve done a 10-year already
this year. They’re doing the bold trade, and
it seems to have worked quite nicely,” said a
banker away from the deal.
The issuer offered a starting concession of
8bp to generate momentum, a strategy that
paid off. UOB, by contrast, offered a NIP of
just 4bp on its €500m no-grow five-year
(Aaa/AAA), in keeping with the aggressively
priced trades typically seen from Singapore
banks.
Books only passed €800m but leads HSBC,
Nord/LB, Societe Generale, UBS and UOB revised
10bp area swaps guidance to a final 7bp spread.
“There is a lot of chiselling on price and
not much left on the table by the time those
guys get done,” said another banker. “You’re
not going to get significantly above what
you’re aiming for on a transaction like that.”
DEUTSCHE HYPO garnered less demand still
for its €500m long six-year Green Pfandbrief
(Aa1), a reflection of the tight swaps less 8bp
reoffer spread. Marketing started earlier at
10bp area through and books closed at
€680m (including €45m JLM interest).
While Green covered issuance remains
sparse, the format gives only a marginaluplift in this sector in comparison to senior
unsecured, bankers said.
“I don’t think it gives a material pricing
advantage, but it helps you get the size done
a bit more easily,” said a third banker. “You
get maybe a couple of million in from pure
Green investors which typically wouldn’t
have bought it because they already own the
name.”
ABN AMRO, BayernLB, Natixis, Nord/LB and
UniCredit ran the deal.
LANDESBANK BERLIN last Friday mandated
DekaBank as sole bookrunner to lead manage
its upcoming €250m no-grow covered bond
transaction. Landesbank Berlin is joint lead
manager.
The deal will carry a 10-year maturity and
is expected to be rated Aaa by Moody’s.NON-CORE CURRENCIES
SUNCORP COVERS A$750m FIVE-YEARRegular visitor SUNCORP-METWAY returned to
the domestic covered bond market last
Thursday with a A$750m dual-tranche five-
year sale at the tight end of revised
three-month BBSW and asset swaps plus
77bp–79bp area guidance.
The transaction comprised a A$200m
floating-rate note and a A$550m 3.0%
September 13 2023 priced at a clean price of
99.954 to yield 3.01%. Initial guidance was in
the 80bp area.
ANZ, Deutsche Bank, NAB, RBC Capital
Markets and Westpac were joint bookrunners
for the latest issue off Suncorp’s US$5bn
covered bond programme.
Suncorp-Metway previously visited the
local covered market in August 2017 with a
A$150m tap of its 3.25% August 24 2026s
which increased the issue size to A$600m.
The country’s fifth largest bank and
biggest non-major also has A$950m of
November 2019 and A$500m of June 2021
covered bonds outstanding.
Suncorp made its covered bond debut in May
2012 with a A$1.6bn dual-tranche 4.5-year
fixed-rate and A$500m 2.5-year floating-rate
note issue. Both notes have matured, as have
the A$600m 4% November 2017s.HIGH-YIELD
UNITED STATES
INTELSAT KICKS CAN DOWN THE ROADSatellite operator INTELSAT reopened the US
junk bond market after a three-week hiatuslast week with a US$2.25bn deal through
issuing entity Intelsat Jackson Holdings that
will help the debt-laden company push out
maturities and deter what some analysts see
as an inevitable restructuring.
Its latest deal, a six-year non-call two issue
maturing in 2024 and rated Caa2/CCC+, was
priced at par to yield 8.5% - in line with
guidance. It was also upsized from US$2bn,
something that some analysts had expected
as it was attractively priced.
CreditSights analysts said the 8.5% yield
on the new deal was about 20bp wide of
where the company’s Jackson unsecured
guaranteed notes maturing in 2025 were
trading.
“Price talk is wide to encourage
participation,” CreditSights said.
“We believe Intelsat would prefer to
upsize this issuance in order to redeem a
more sizeable portion of the 2021s in
addition to the 2020s.”
The new deal went towards financing a
tender for an existing bond issue maturing
in October 2020 and paying 7.25% interest.
Some US$2.2bn of that bond is outstanding.
It follows another recent bond offering
from Intelsat, in early August, when it raised
US$1.25bn from a different issuing entity –
Intelsat Connect Finance – which also
refinanced existing debt.
Still, despite its efforts, Moody’s warns
that the company’s current capital structure
is unsustainable over the longer term and it
is ultimately likely to need to restructure its
debt – hence its low rating.
Moody’s estimates that adjusted debt/
Ebitda exceeds nine times earnings.
“Elevated leverage and the potential of
excess supply and sustained cashflow pressure
stemming from evolving industry
fundamentals are combining to increase the
potential of debt restructurings,” said Moody’s.
But its good scale, large revenue backlog,
and sufficient liquidity should help Intelsat
navigate through the next year, the ratings
agency said.
“They’re just buying time,” said one
investor.
A group of investors, led by BC Partners,
acquired the majority of Intelsat from other
private equity firms in 2007 for US$16.4bn,
including debt.
JP Morgan was lead-left on the new issue.
Credit Suisse, Goldman Sachs and Morgan Stanley
were also bookrunners.COVENANT REVIEW SLAMS REFINITIV
JUNK BOND TERMSA credit research firm is urging investors to
push back on the terms of a high-yield bond
that will help finance BLACKSTONE’s
acquisition of REFINITIV, the Financial and
Risk division of Thomson Reuters.ALL COVERED BONDS (ALL CURRENCIES)
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 UniCredit 57 9,325.95 5.8
2 HSBC 51 9,244.25 5. 7
3 LBBW 55 9,224.53 5. 7
4 Commerzbank 53 8,962. 23 5.6
5 Natixis 44 8,895.32 5.5
6 Deutsche Bank 38 7 ,362.44 4 .6
7 Credit Agricole 36 6,782.40 4 .2
8 SG 35 6,749.35 4 .2
9 Credit Suisse 31 6,370.65 4 .0
10 UBS 30 5,851.48 3.6
Total 221 16 1,025.23
Source: Thomson Reuters SDC code: J15a6 Bonds 2250 p25-55.indd 41 07/09/2018 19:30:00