02 Feb 2018
Leading the industry in money fund news.
The primary market is out of the blocks strongly on Thursday as issuers continue to make up for lost time after continental European holidays kept a lid on activity in the first two days of the week.
That's seeing another trio of names reach out to EUR investors on Thursday in the shape of RCI Banque, Cap Gemini and BASF to follow the EUR3.3bn of IG supply from six separate corporate issuers on Wednesday.
RCI Banque SA (Baa1/BBB) is refreshing its 5yr curve with a new Nov 2021 line via Banca IMI, Natixis, SG CIB and UniCredit, the fourth time that the financing arm of Renault has sold benchmark EUR this year.
Books opened at m/s +70/+75 IPTs which was revised to guidance at +60-65 with books in excess of EUR1.7bn.
At first glance, this offers a new issue concession of ca. 6-7bps at guidance assuming fair value in the +53-54bps area. Official comps were given as follows:
��� RCI Banque - Pre-Announce Secondary Comps ���
Bid side vs i-sprd:
RCI BANQUE SA 1,375 17/11/2020 500mn I+45
RCI BANQUE SA 2,250 29/03/2021 500mn I+45
RCI BANQUE SA 1,250 08/06/2022 750mn I+58
RCI BANQUE SA 1,000 17/05/2023 600mn I+65
RCI BANQUE SA 0,500 15/09/2023 750mn I+59
Capgemini triggers positive response
Also targeting the 5yr part of the curve with a EUR500m no grow Nov 2021 line is Paris headquartered consultant and technology group Capgemini (BBB stable by S&P).
Leads Barclays, BNPP, Credit Agricole CIB, HSBC and Morgan Stanley have opened the books at m/s +70bps area IPTs, which was revised sharply to +55 area (+/- 3bps), before the reoffer was subsequently set at m/s +52 on solid demand of over EUR3.3bn. .
This represents the company's first EUR benchmark since July 2015 when it raised EUR2.75bn via a 3-part issue.
That included two fixed rate tranches, a 1.75% Jul 2020 and 2.50% Jul 2023 line which were bid around m/s +41 and +58 pre-announcement. That outlines fair value on the new Nov 2021 line at ca. m/s +49 and a modest NIC in the low single digits at reoffer.
BASF refreshes both ends of the curve
Taking a 2-pronged approach is BASF Finance Europe BV (A1/A) which is marketing a 4/10yr benchmark under the guidance of BAML, BayernLB, BBVA, Credit Agricole CIB and Deutsche Bank. Books opened at m/s +25/30bps and +35/40bps respectively.
This marks a relatively quick return to the market for the German chemical giant which sold EUR500m of 0.875% Oct 2031 bonds in late September, with that deal bid ca. m/s +28 pre-announcement. Meanwhile, the group's outstanding 2.50% Jan 2024 line was ca. +20, indicating fair value on the longer dated piece at around the +23 area giving an initial NIC of ca. 12-17bps.
At the shorter-end of the curve, BASF has older 1.875% Feb 2021 and 2.0% Dec 2022 lines at ca. m/s +12 and +15, indicating fair value for the new 4yr is ca. 14bps and a similar concession of 11-16bps at IPTs.
Short-end of credit curve renews its appeal
One immediate takeaway from the composition of Thursday's supply is that it is predominantly focused on the short-end of the curve, with the exception of BASF's 10yr.
While the likes of RCI Banque regularly has a requirement for shorter-dated funding to match its car financing liabilities, this is nevertheless something that has rarely been seen this year in an environment where issuers have proved keen to capitalise on historically low rates and flat credit curves to extend their maturity profiles.
This in turn has accommodated demand for yield.
However, the recent rise in underlying yields has moved the goalposts somewhat, providing yields which are more digestible for investors at the shorter end of the curve.
For example, the 4yr mid- swap rate is currently ca. -5bps which would equate to a yield of ca. 20bps on BASF's new 4yr line if it priced at the tight-end of IPTs. This is notably higher than the 5bps which would have been on offer little more than a month ago.
Also, the broader market has become more jittery of late on the back of heightened political risk given recent developments ahead of the US elections coupled with a slide in global oil prices.
This has also heightened the attraction of shorter-dated assets as longer maturities have become a more challenging sell, with investors looking for somewhere to park their cash that offers a 'safe haven' but also a decent pick-up versus govvies as well as good tightening potential given CSPP eligibility.
That said, one issuer which so far has decided not proceeded with its planned transaction on Thursday is chemical company LyondellBasell Industries N.V (Baa1/BBB) which held a global investor call on Wednesday morning via JP Morgan and HSBC ahead of a potential EUR 12yr fixed rate benchmark.
G4S shines in secondary
Turning to the secondary market, and Wednesday's host of transactions from Fonterra, Abertis, Statoil and Dover Corp are all holding in around reoffer on Thursday morning with Abertis and Statoil marginally offside.
Standing out from the crowd is the EUR500m Jan 2023 deal from G4S International Finance (BBB- by S&P) which commanded a blowout book north of EUR3.6bn and has continued to perform strongly in the secondary market.
Recall, final reoffer was ramped in to m/s +140bps from IPTs at +170/175 and the deal is bid a further 9-10bps inside reoffer this morning.
|Issuer||Deal||Re-offer spread||Current spread & change vs previous day||Rating|
|FCGNZ||0.75% 11/24||MS+55||MS+56 (+1)||A-/A|
|GFSLN||1.5% 01/23||MS+140||MS+130.5 (-9.5)||BBB-|
|ABESM||1.00% 02/27||MS+75||MS+76 (+1)||BBB/BBB+|
|DOV||1.25% 11/26||MS+85||MS+84 (-1)||A3/A-/A-|
|STLNO||1.625% 11/36||MS+68||MS+69 (+1)||Aa3/A+|
|STLNO||0.75% 11/26||MS+38||MS+38.5 (+0.5)||Aa3/A+|
|TVOYFH||2.625% 01/23||MS+260||MS+244 (-1.5)||BB+/BBB|
|WHR||1.250% 11/26||MS+87||MS+81 (unch)||Baa1/BBB/BBB|
|PUBFP||0.500% 11/23||MS+50||MS+50 (unch)||Baa2/BBB+|
|PPG||0.875% 11/25||MS+60||MS+56 (-0.5)||A3/A-/A-|
|PPG||0.000% 11/19||MS+25||MS+21 (unch)||A3/A-/A-|
|ORAFP||0.875% 02/27||MS+45||MS+44.5 (unch)||Baa1/BBB+/BBB+|
|MRK||1.375% 11/36||MS+50||MS+41 (unch)||A1/AA|
|MRK||0.500% 11/24||MS+28||MS+26.5 (+0.5)||A1/AA|
|VZ||1.375% 11/28||MS+83||MS+80 (unch)||Baa1/BBB+/A-|
|VZ||0.875% 04/25||MS+65||MS+62 (unch)||Baa1/BBB+/A-|
|VZ||0.500% 06/22||MS+50||MS+45 (-1)||Baa1/BBB+/A-|
|MRLSM||1.875% 11/26||MS+160||MS+158.5 (-0.5)||Baa2/BBB|
|BNFP||0.167% 11/20||MS+28||MS+24 (-0.5)||Baa1/BBB+|
|BNFP||0.424% 11/22||MS+40||MS+36.5 (-1)||Baa1/BBB+|
|BNFP||0.709% 11/24||MS+50||MS+47.5 (unch)||Baa1/BBB+|
|BNFP||1.208% 11/28||MS+65||MS+59 (unch)||Baa1/BBB+|
|IREIM||0.875% 11/24||MS+80||MS+99 (+7)||BBB|
|COLSM||1.450% 10/24||MS+135||MS+138 (+0.5)||BBB-|
IGM FX and Rates
31 Jan 2017
Between the inevitabilities of death and taxes one would like to hope there’s room for a comfortable, perhaps a long, retirement. Alas, the data on that possibility is rather depressing for an awful lot of Americans.