ISSUERS KEEP THEIR COOL
In the meantime, borrowers appear
UNSHAKENûBYûTHEûCONmICTINGûRUMOURSû
regarding the ECB revising its policy
message in early 2018. The pipeline is
looking rather meagre - unrated Pirelli and
Ubisoft are expected in the coming days,
while S Immo and BWP Project Services
should come in a couple of weeks.
“The end of QE is clearly something to
watch out for, but it’s still a very long way
away. I am not too worried about it,” a
second banker said.
Despite halving monthly purchases to
€30bn, the central bank continues to
support the corporate sector, which
represented €1.38bn, or 13.6%, of its APP in
the second week of January.
This compares with a weekly average of
10.9% of APP purchases since April 2017,
according to BNP Paribas credit trading desk
analyst Paola Lamedica.
Her expectations for the CSPP are between
€4.5bn and €6bn per month in 2018 on the
back of scarcity issues in the government
market and because of higher redemptions
in covereds and ABS than for corporates.
As a result, the continuous ECB support is
widely expected to allow spreads to keep
tightening even as Bunds sell off.
“It will also likely help the technical backdrop
stay strong enough to allow new issues to keep
being squeezed,” an investor said.
The largest concession on offer so far this
year was 12bp from AB InBev on its 6.25-
year FRN tranche. Most deals have come
with premiums of around 5bp, some left
nothing on the table, and Daimler and Dwr
Cymru priced through their curves.
“Yet people are happy to take these low
concessions on offer rather than competing
with the ECB in the secondary market at
EVENûTIGHTERûLEVELS vûTHEûlRSTûBANKERûSAID
CreditSights analysts concur with
expectations of the moderate impact of QE
tapering on spreads.
“Even assuming the high levels of euro
investment-grade issuance we have seen
over the past couple of years continues this
year, we think net supply is likely to remain
modest and unlikely to contribute
meaningfully to spread widening,” they
said.UBISOFT AND S IMMO ADD TO UNRATED
PIPELINEUBISOFT ENTERTAINMENT is gearing up for its
lRSTûSIZEABLEûSENIORûOFFERING ûHAVINGû
mandated BNP Paribas, Commerzbank, Credit
Agricole and JP Morgan to arrange investor
meetings starting on Monday.
The unrated French video game publisher
is expected to follow another unrated
borrower, tyremaker PIRELLI, which held a
ROADSHOWûLASTûWEEKûFORûAûlVE
YEARûEUROû
benchmark.
Meanwhile, unrated Austrian real estate
company S IMMO has mandated Erste Group as
sole bookrunner to arrange an investor call
on January 29 for a potential euro-
denominated sub-benchmark dual-tranche
(six and 12-year) deal.
Ubisoft, which has convertible bonds as
well as small-sized notes outstanding, is
SEEKINGûTOûRAISEûõM
õMûINûAûlVE
YEARû
transaction to repay part of its existing debt.
A deal could come as soon as January 25.
!ûLEADûBANKERûHIGHLIGHTEDûTHEûDIFlCULTYûOFû
estimating fair value in the absence of a
curve or relevant comparables, but pointed
to good feedback received from investors
ahead of the roadshow.
“There are opportunities for both issuers
and investors in the unrated space. There
might be fewer investors for such deals but
the pick-up you get on them, compared to
IG, is usually very attractive.”
Pirelli, which last tapped the market in
November 2014, is expected on Monday.
“Bids for unrated names have clearly gone
up in the last year, so it will be interesting tosee how this one goes,” a banker away from
the deal said.
In early November last year, Ferrari
garnered over €1.75bn of orders for a €500m
January 2021. That priced at 45bp over mid-
swaps and was tighter at 43.7bp bid on
Friday.PEARSON ANNOUNCES CASH
TENDER OFFERUK publishing and education company
PEARSON has announced a cash tender offer
for its €500m 1.875% 2021s at a 0% yield to
maturity and €500m 1.375% 2025s at mid-
swaps plus 45bp.
The rationale of the offer, which ends on
January 24, is to optimise the group’s source
and maturity of the debt portfolio and
therefore maintain an appropriate capital
structure.STERLING
DWR CYMRU LEAKS FIRST STERLING
OF THE YEARA £300m March 2036 secured from DWR
CYMRU WELSH WATER ticked all the boxes for
investors, who poured more than £800m of
orders into the rare offering despite it being
marketed very close to fair value and
eventually coming through the curve.
h4HEûDEALûWILLûDElNITELYûTICKLEûTHEûTASTEû
buds of all the key big investors, in
particular life insurance and pension funds,
because of its sector, tenor and currency,” a
banker away predicted early in the trade.
December saw an underwhelming amount
of sterling issuance, the bulk of deals coming
in late November as borrowers pre-empted
upcoming redemptions and coupon
payments. The most recent investment-grade
corporate was the University of Oxford’s
£750m 100-year on December 1.
Single A rated Dwr Cymru, which printed
its last nominal bond more than a decade
ago, started marketing on Wednesday at
85bp–90bp over the 2036 Gilt before
TIGHTENINGûTOûAûlNALûBP
Leads pegged fair value at 85bp based on
the utility’s March 2028s and other UK water
sector curves.
“The UK investor base understands the
water utility sector very well. They like it,
it’s regulated,” a syndicate banker said
ahead of the roadshow, which ended on
Tuesday. “It’s the best-rated water company
from the UK at A2/A/A.”
BNP Paribas, HSBC and Lloyds were joint
lead bookrunners.
Severn Trent was the last such issuer,
COMINGûWITHûAûaMûNO
GROWûlVE
YEARûATû
90bp over Gilts in late November.BONDS CORPORATESALL INVESTMENT-GRADE BONDS IN EUROS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues €(m) (%)
1 BNP Paribas 15 7,367.75 7.9
2 JP Morgan 12 6,742.92 7.2
3 Barclays 12 6,734.54 7.2
4 Credit Agricole 15 6,713.71 7.2
5 UniCredit 17 6,606.40 7.1
6 Goldman Sachs 7 5,079.27 5.4
7 SG 16 5,045.50 5.4
8 NatWest Markets 9 4,875.18 5.2
9 Citigroup 16 4,739.36 5.1
10 UBS 4 3,834.78 4.1
Total 68 93,423.94
Excluding ABS/MBS, equity-related debt.
Source: Thomson Reuters SDC code: N9
ALL INTERNATIONAL STERLING BONDS
EXCLUDING SECURITISATIONS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues £(m) (%)
1 HSBC 11 2,201.79 16.1
2 RBC 10 1,803.30 13.2
3 NatWest Markets 10 1,760.63 12.8
4 Barclays 7 1,309.69 9.6
5 UBS 1 999.67 7.3
6 Nomura 5 682.69 5.0
7 Lloyds Bank 4 660.18 4.8
8 TD Securities 4 590.30 4.3
9 BAML 2 581.24 4.2
10 Credit Suisse 4 466.17 3.4
Total 23 13,705.13
Including preferreds. Excluding equity-related debt.
Source: Thomson Reuters SDC code: K05a