SAFA TO REOPEN MAY 2028sThe SOUTH AUSTRALIA GOVERNMENT FINANCING
AUTHORITY ûRATEDû!A!!û-OODYS30 ûHASû
mandated CBA ûCitigroup ûRBC Capital Markets
and WestpacûFORûAûMAXIMUMû!BNûTAPûOFûITSû
!BNûû-AYûûûBOND ûSCHEDULEDû
FORûTHEûlRSTûHALFûOFû.OVEMBER
3!&!ûRAISEDû!BNûFROMûTHEûINITIALû
SYNDICATEDûSALEûOFûTHEûBONDûONû*ULYû ûWHICHû
PRICEDûBPûWIDEûOFû%&0û
YEARûFUTURES û
ANDûBPûOVERûTHEû-AYûû!#'"
CORPORATES
US DOLLARS
VOLATILITY LIKELY THE NEW NORM
IN IG MARKETS
7HILEûSOMEûSTABILITYûINûTHEû53ûEQUITYû
MARKETSûOPENEDûWINDOWSûFORûHIGH
GRADEû
borrowers last week and pushed volumes
HIGHER ûANûUNDERLYINGûPESSIMISMûCONTINUESû
to hang over credit.
4WENTY
FOURûISSUERSûRAISEDû53BNûLASTû
WEEK ûUPûFROMûJUSTûOVERû53BNûTHEûPRIORû
WEEK ûBUTûDEALûSIZESûWEREûMUTEDûANDû
borrowers had to give up concessions to
price amid weaker demand.
“Borrowers have been forced to
RECALIBRATEûPRICINGûEXPECTATIONS ûANDû
in some cases we moved borrowers
BPnBPûWIDERûINûAûWEEK ûREmECTINGû
THEûOVERALLûBACKDROP vûAûBANKERûTOLDû
IFR.
“We had a number of borrowers stand
DOWN ûNOTûTOTALLYûCONVINCEDûTHEûMARKETûHADû
FULLYûRECOVERED ûWHICHûTURNEDûOUTûTOûBEûAû
PRUDENTûVIEWv
&ORûEXAMPLE ûAMERICAN EXPRESS launched in
a US$3bn size and BP CAPITAL MARKETS at
53BN ûBUTûINûBOTHûCASESûNEWûISSUEû
CONCESSIONSûWEREûUP ûATûAROUNDûBPûANDû
BP ûRESPECTIVELY
!DDITIONALLY ûDEALSûFROMûISSUERSûSUCHûASû
TECHûMATERIALSûCOMPANYûCORNING saw no
price movement from IPTs.6OLUMEûCOULDûPICKûUPûSOMEûTHROUGHûTOû
YEAR
END ûESPECIALLYûASûINVESTORSûEYEûSIZEABLEû
-!ûDEALS ûINCLUDINGû"ROADCOMSûPURCHASEû
OFû#!û4ECHNOLOGIES û4AKEDASûACQUISITIONûOFû
3HIRE ûANDû7ALTû$ISNEY ûWHICHûMAYûLOOKûTOû
FUNDûITSûSPIN
OFFûOFû.EWû&OX
But sources have noted the window to
ISSUEûISûVERYûSHORTûBECAUSEûOFû53ûMIDTERMû
ELECTIONSûANDûUPCOMINGûHOLIDAYS
“We’re going to see a decrease in net
SUPPLYûNEXTûYEARûTOûTHEûORDERûOFû ûANDûONEû
OFûTHEûMAINûREASONSûFORûTHATûISûFORWARDû-!û
ISûFAIRLYûLOW vû*ESSEû&OGARTY ûSENIORûPORTFOLIOû
MANAGERûFORû)NSIGHTû)NVESTMENT ûTOLDû)&2
)SSUANCEûTOTALLEDû53BNûINû/CTOBERû
ANDûWASûPROPPEDûUPûINûLARGEûPARTûBYûTHEû
/CTOBERûû53BNû#OMCASTû-!ûDEAL û
which was the second largest issuance of the
YEARûANDûTHEûFOURTHûLARGESTû)'ûDEALûOFûALLû
TIME ûACCORDINGûTOû)&2ûDATA
-OREû-!ûDEALSûCONTINUEûTOûARISEûANDû
THEYûAREûINCREASINGLYûSPECULATIVE ûSUCHûASû
IBM’s announced US$20bn purchase of Red
(AT ûSAIDû*ASONû3HOUP ûSENIORûlXEDûINCOMEû
STRATEGISTûWITHû,EGALûû'ENERALû)NVESTMENTû
-ANAGEMENTû!MERICABONDS CORPORATESNetherlands hopes to go Green in 2019
SRI Sovereign plans to follow Dutch agencies with Green bondThe NETHERLANDS has announced its intention to
join Poland, France, Belgium and Ireland in the
list of European sovereigns to have issued Green
bonds. It would be the first Triple A sovereign to
tap the market.
While Dutch borrowers have been active in the
Socially Responsible Investment space – pricing
€4.6bn so far this year, according to IFR data –
the sovereign has taken its time.
Dutch finance minister Wopke Hoekstra
said in a statement that between €3.5bn and
€5bn of the government’s annual budget
can be earmarked as green each year, with
proceeds going towards areas such as railway
infrastructure, energy efficiency and the
development of renewable energy.
Further details about the issuance will be
announced on December 14.
“Whoever makes the decision to go Green is
making a strategic statement,” said a banker
who advises on SRI transactions.
“Sovereigns are thinking, oh I have signed
the COP 21 [Paris Agreement] and so many
other agreements, and what is it that I can do to
translate that into my financial doings? This is
one of the driving forces behind the issuance.”ROAD TO GREEN
The fact that many Dutch issuers have tapped the
Green and Sustainable market has paved the way for
the sovereign, according to a second DCM banker.“The Netherlands is one of the leading
countries in the world for expertise and
commitment to this area,” he said.
“Alongside Sweden, they were the leaders
in the Green investment world. It is in the
atmosphere, the nature of the country, what
people are committed to, and that transmits to
the politics and markets.”
Last week for example, BNG BANK priced a
US$500m three-year Sustainable deal while
NWB BANK mandated an Affordable Housing
Bond.
BNG received over US$650m of orders for
what was its first trade in the format this year. ESG
investors accounted for 43% of the allocations.
Despite the oversubscription, not all investors
could buy into it due to the small transaction
size, the currency and BNG’s own sustainable
framework.
“Issuing three-year US dollars, you usually
have interest from central banks, and we
don’t know to what extent some of them have
a sustainable portfolio,” said BNG’s head of
funding Bart van Dooren.
According to its sustainable framework, the
proceeds will be extended as loans to “best in
class” Dutch Social Housing Associations.
“Some investors can’t buy into this kind of
framework because of the reputational risk. We
can’t tell investors what housing associations
are doing with the funds because we don’t askthem, therefore we have set up this ‘best in class
framework’,” said van Dooren.
In this context, BNG (Aaa/AAA/AA+) started
marketing at 6bp area over mid-swaps last
Tuesday, offering 1bp-2bp of premium versus its
conventional curve.
Leads BNP Paribas, Citigroup and TD
Securities went on to tighten pricing by 1bp,
landing at plus 5bp.
“Pricing was fair, but it wasn’t really generous.
The US$500m kept some investors away, but they
got what they wanted,” said the second banker.
NWB Bank is also in line to join the fray. Last week,
it mandated Bank of America Merrill Lynch, HSBC,
Nomura and Rabobank to arrange investor calls for a
euro-denominated Affordable Housing Bond.
The Aaa/AAA rated institution last issued an
Affordable Housing Bond in September. That
€1bn five-year came at 16bp through swaps via
BNP Paribas, DZ Bank, JP Morgan and SEB, and
was bid last Thursday at less 15bp.
The deal, however, wasn’t fully sold, with
books last reported at €750m. At the time,
bankers said it was “tightly priced”.
This time NWB is targeting the long end of
the curve.
“That part of the market is much more tricky
right now because QE stopped expanding. They
have to be very careful to not get pricing wrong,”
said the second banker.
Priscila Azevedo Rocha