44 International Financing Review September 8 2018DOMETIC COMEBACK TURNS SPOTLIGHT
ON OPPORTUNISTSDOMETIC’s €300m five-year print could
provide comfort to other borrowers that
stepped back from the market earlier in the
year when volatility hit pricing.
The Swedish company, rated Ba3/BB,
which makes electrical appliances for
yachts and camper vans, is one of the first of
around 10 refinancing trades shelved before
the summer to return to the market,
according to a banker.
The company’s senior unsecured deal
priced at a 3% yield on order books of
around €650m. It started marketing a
€250m trade at 3.25% area IPTs, which
then tightened to 3%-3.125% prior to final
terms.
The company had reportedly been
looking to raise €500m in May.
“We came out at a point in time when
there was a lot of turbulence in the financial
markets, given Italy and so on, so we waited
for a more stable situation,” head of investor
relations Johan Lundin told IFR. “We’re
satisfied with the deal that has been put into
place.”
The banker said a fair amount of pre-
marketing is going on this week, including
several deals that were pulled back between
April and June.
“Even though it’s a crossover name, 3%
pricing on Dometic would be a vote of
confidence,” the banker said.
“The annoying thing, to some extent, is
the fact that Refinitiv will absorb quite a bit
of liquidity and is offering levels which are
generous, so I hope it won’t reprice the
market,” he added.
Thomson Reuters’ Financial and Risk
unit, which includes IFR and will be
renamed Refinitiv following the close of its
buyout deal by Blackstone, set price talk on
Wednesday morning.
It is marketing a US$1bn-equivalent
senior secured first-lien 7.5-year non-call
three offering at 5% area, and a US$700m-
equivalent senior unsecured eight-year
non-call three offering at 7% area, with B2/
BB and Caa2/B+ ratings from Moody’s and
Fitch.
Another issuer that pulled a public
refinancing deal before summer was UK
speciality chemicals company SYNTHOMER. It
opted for a revolving credit facility in
August that refinanced part of the debt the
bond would have taken out, but said that it
retained the option to return to the bond
market should it move more favourably.
When it came to market in June, it had
been looking for three-handle pricing on a
€300m seven-year non-call three senior
trade, but pulled the deal after accounts
demanded four-handle pricing.EI GROUP MARKETING CONVERTIBLE
BOND REFINANCINGEI GROUP kicked off its roadshow for a £150m
5.5-year non-call two senior offering via BNP
Paribas and Deutsche Bank (B&D) on Friday.
The deal is rated B by S&P. Proceeds from
the Reg S-only trade will in part be used to
fully or partially repay convertible bond debt.
The roadshow ends on Monday. Lloyds and
NatWest Markets are also on the deal.STRUCTURED FINANCE
EMEA MBS
STORM SIGNAL AS OBVION PRINTS AT 28BPOBVION priced its latest Dutch RMBS STORM 2018-
II at 28bp on Thursday, double the margin of
its most recent benchmark in January.
“It surprised me,” said one investor.
“Storm is a very strong name that always
prices at the tight end of the Dutch curve.
“This is not something that can be
overlooked, this is a serious signal for the
market,” he said.
The spread is the widest from Obvion’s
regular Storm programme platform for two
years, even though the deal is the smallest
for four years with just €850m sold.
The last four deals have been between €1.6bn
and €2.1bn. In January the Class A from Storm
2018-I was €2.1bn and came at plus 14bp.
The size of the new issue had been
indicated at between €500m and €750m on
Wednesday when the spread was set at
28bp, before the upsize at pricing on
Thursday. A final book well over €900m left
the tranche just modestly covered.
When initial price thoughts were released at
high 20s on Tuesday, some market participants
expected the final print to be driven well inside
those IPTs. That had been the case with the
previous week’s German auto ABS Driver 15,
which at 18bp came wide of previous deals but
well inside cautious IPTs of low 20s.
At that point Storm was seen in the low
20s in the secondary market. At the start of
the week a €50m piece of Storm 2018-I was
reported trading on a BWIC with a 24bp
cover, while some of Green Storm 2017
traded with a 23bp cover.
“There has been pullback in the
secondary market from the central bank,
which has not been as aggressive buying
paper,” said one trader.
“That definitely changed the assumptions
of a lot of investors and it was probably
inevitable that the spreads in the primary
space widened on the back of that.”According to another market participant:
“It’s hard to hang your hat on how the ECB is
going to behave so it’s hard to be absolutely
sure that if you buy a bond they’re going to
buy it off you [in secondary].”
However the ECB still appears active on
the primary side. Distribution statistics for
Storm show central banks and official
institutions buying 38%. Banks and private
banks took 35%, asset managers 15% and
insurance and pension funds 12%.
German accounts bought 39%, Benelux
38%, France 14%, UK 3% and others 7%.
The deal was lead managed by joint leads
Rabobank and Societe Generale.NO MUCKING AROUND ON BRASS 7
SPREADYORKSHIRE BUILDING SOCIETY’s BRASS NO.7 UK
RMBS reassured investors with the first
prime sterling RMBS after the summer,
which came well wide of its last deal but –
crucially – inside price talk.
The process gave investors confidence
that syndicate desks are getting a handle on
market clearing levels, after several sterling
deals before the summer break saw spreads
widen between initial price thoughts and
final pricing.
Brass No.7 sold £300m of 2.96-year Triple
A paper at 60bp over three-month Libor,
after IPTs of 65bp area. The previous deal in
October came at 37bp.
“I thought 65bp was very attractive,” said
one investor. “At 60bp it’s still reasonable
for what it is, a short tight profile that’s
going to be pretty liquid.”
The investor suggested that if the deal had
been priced at the tights earlier in the year,
the margin could have been closer to 30bp.
“So you’re sort of getting double the
spread.”
Joint leads Bank of America Merrill Lynch, BNP
Paribas and Lloyds closed the book with more
than £700m of orders at the final spread and
20 investors participating.
Demand “bodes well for some of the near-
term pipeline,” said one syndicate official.
“But three to four trades from now, when
you get to mid-September, I question
sterling investor depth and liquidity because
we saw that fall off pretty quickly in July.
“At the moment we’ve found a bit of a base
and clearing level but it remains to be
confirmed where those move in the next
few weeks.”
Spreads widened in July after a delayed
reaction to wider market weaknesses and on
expectation of heavy supply after the
summer. Some of that extra supply follows
the closure of the Term Funding Scheme in
February, which prompted UK lenders to
look once again to the capital markets for
wholesale borrowing.6 Bonds 2250 p25-55.indd 44 07/09/2018 19:30:00