STERLING
CABLE FORMS THE BASIS OF QUEBEC
STERLING BOND
A week after PROVINCE OF QUEBEC took
advantage of a move in the euro/dollar basis
to print in the single currency, the region
jumped on a favourable shift in the sterling/
dollar basis to sell a £500m December 2023
bond on Thursday.
“There has been a sharp move in cable
basis, which in turn puts an issuer like
Quebec in the position where pricing back
to Canadian dollars looks markedly
different to a week ago,” said a lead.
The lead spotted the sterling/dollar basis
WIDENINGûFROMûmATûTHREEûWEEKSûAGOûTOûBPû
by Wednesday. He saw it back in a touch on
Thursday at 12.5bp.
“When we looked at our costs, the deal
made sense,” said Guillaume Pichard, director
in capital markets at the Quebec ministry of
lNANCEûh,OOKINGûATûTHEûARBITRAGE ûTHISûWASû
BASICALLYûmATûTOûOURûDOMESTICûFUNDINGûLEVELSv
The issue size surpassed Quebec’s last
trade in the currency in May 2017, a £300m
note due May 2022. The last book update for
the new trade showed orders over £500m.
“We just had real money accounts come
in and there was room in our funding
programme to do £500m, as last year we
were limited,” said Pichard. “This takes us to
a different category in terms of liquidity.
Given our reception, we hope to visit the
sterling market every 12-18 months or so.”
Pichard said investors had been attracted by
the chance to diversify into a province, and
also grab a decent spread over Gilts. The notes
priced in line with IPTs at Gilts plus 52bp.
The region is rated Aa2/AA-/AA-, all with
stable outlooks. HSBC "$ , Bank of America
Merrill Lynch, NatWest Markets and TD were
joint lead managers.
The INTERNATIONAL FINANCE CORPORATION also
stepped into the sterling market during the
WEEK ûPRINTINGûITSûlRSTû'REENûBONDûINûTHEû
currency.
The Aaa/AAA rated issuer, a member of
the World Bank group, sold a £350m
$ECEMBERûû3%#ûEXEMPTû'LOBALû
benchmark at Gilts plus 30bp.
Pricing was moved tighter by 1bp from
)04S ûWITHûlNALûBOOKSûCLOSINGûINûEXCESSûOFû
£550m.)&# ûWHICHûFOCUSESûEXCLUSIVELYûONû
private sector lending in developing
countries, launched a Green bond
programme in 2010.
From July 2017 to June this year, IFC
raised over US$1.7bn through 30 Green
bonds, taking cumulative issuance under
the programme to US$7.5bn from more
than 100 bonds in 12 currencies.
This was its debut sterling foray in the
format.
The proceeds will be allocated within
IFC’s treasury to a sub portfolio linked to
IFC’s lending operations for climate
projects.
The leads were Barclays, Citigroupû"$ û
and HSBC.NON-CORE CURRENCIES
AOFM TO OPEN MAY 2041 LINEThe AUSTRALIAN OFFICE OF FINANCIAL MANAGEMENT
has mandated CBA, TD Securities, UBS and
Westpac for a syndicated sale of its new May
21 2041 Treasury Bond in the week
beginning July 16.ALL INTERNATIONAL BONDS (1/1/2018–30/6/2018) CURRENCY VS TYPE OF INSTRUMENT
All issues Straights FRNs Convertibles
No of issues Amount US$(m) No of issues Amount US$(m) No of issues Amount US$(m) No of issues Amount US$(m)
US Dollar 1,351 1,114,167 1,048 925,134 285 182,600 18 6,433
Euro 930 800,061 704 679,985 213 115,601 13 4,475
British Pound 180 99,469 120 63,273 57 36,177 3 19
Australian Dollar 140 16,012 132 13,833 8 2,179 – –
Canadian Dollar 25 15,564 10 10,378 4 4,101 11 1,085
Japanese Yen 61 13,985 49 11,887 1 31 11 2,068
Chinese Renminbi 63 13,372 63 13,372 – – – –
Swiss Franc 54 12,519 51 10,352 1 214 2 1,953
Hong Kong Dollar 62 7,950 51 3,259 5 1,349 6 3,343
Swedish Krona 78 6,928 60 5,286 18 1,642 – –
Norwegian Krone 35 3,850 25 3,172 10 679 – –
New Zealand Dollar 20 3,288 19 3,255 1 33 – –
Chilean Peso 1 1,606 1 1,606 – – – –
Argentine Peso 2 1,513 1 26 1 1,487 – –
Indian Rupee 14 985 14 985 – – – –
Dominican Repub Peso 1 818 1 818 – – – –
Polish Zloty 3 805 1 93 2 712 – –
Mexican Peso 19 788 19 788 – – – –
Russian Rouble 6 678 6 678 – – – –
Singapore Dollar 3 572 3 572 – – – –
Turkish Lira 15 549 15 549 – – – –
Brazilian Real 15 547 15 547 – – – –
Indonesian Rupiah 3 443 3 443 – – – –
South African Rand 5 332 5 332 – – – –
Kazakhstan Tenge 1 301 1 301 – – – –
South Korean Won 1 284 – – – – 1 284
Romanian Lei 3 59 3 59 – – – –
Philippine Peso 65 56 1 56 – – 64 –
Czech Koruna 2 44 2 44 – – – –
Malaysian Ringgit 1 13 1 13 – – – –
Ghanaian Cedis 1 10 1 10 – – – –
Total 3,160 2,117,565 2,425 1,751,104 606 346,802 129 19,659
Source: Thomson Reuters