02 Feb 2018
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EUR500m 16-Nov-2026, cpn 0.25%, fpr 98.917 (m/s -15, DBR +21.98), yield 0.3605%. Leads CA CIB, Commerzbank, Danske Bank, ING and LBBW. Pay 16 November. Expected ratings Aaa.
** VIEWPOINT **
ING-DiBa returned to the Euro covered bond market on Tuesday after an absence of over four and a half years, capitalising on a stable market backdrop for the asset class in the early part of the week with a two-day strategy, which provided time for investors to polish off any credit work required for this rare issuer.
It is fair to say that the response from investors for the EUR500m 10yr HyPfa was steady rather than overwhelming; although a solid issuer (and parent ING), its rarity value and high quality German residential cover pool spearheaded a particularly decent domestic bid from real money accounts.
The upshot of this saw the final book flirting with EUR800m, which was sufficient for ING-DiBa to take its targeted EUR500m out of the market relatively comfortably, with what also marked an economic exercise for the issuer. The latter is reflected by the very modest new issue concession of just a basis point at best and is reinforced by the fact that the deal boasts the second tightest 10yr EUR benchmark Pfandbrief this year at the m/s -15bps reoffer spread, second only to WL Bank's EUR500m Aug-2026 which printed at m/s -17 back in August.
The transaction bolsters ING-DiBa's fledgling EUR covered benchmark curve from the aforementioned EUR500m Mar-2019 issued back in 2012.
ING-DiBa is the third largest private bank (by number of customers) in Germany (after Deutsche Bank and Commerzbank) with a focus on retail and wholesale banking. The bank has EUR64.7bn worth of German residential mortgages on its books, making up ~45% of its total assets.
The Pfandbrief cover pool comprises ~EUR3.9bn (nominal value) of residential mortgages from ~54k loans with a weighted average seasoning of 4.54 (as of 31 Dec 2015) and a weighted average loan-to-value ratio of 53.4%.
The deal was announced as a EUR500m (no grow) 10-year (16-Nov-2026) on Monday morning via Cr�dit Agricole CIB, Commerzbank, Danske Bank, ING and LBBW with launch slated for the following day's business. Books subsequently opened on Tuesday morning with initial guidance at m/s -12 area, and with demand having topped EUR750m (excluding JLM interest) so guidance was revised to m/s -14 area. The spread was set an hour later at m/s -15bp. Final books closed just shy of EUR800m from over 40 accounts, supported by EUR70m of JLM interest.
Comps, NIP and secondary market performance
The paucity of obvious pricing points of reference on the issuer's curve made accurately pinpointing fair value difficult, although one of the leads felt it was somewhere in the m/s -15/-16 range, indicating a concession of 1bp at most. The deal was bid just a fraction wider the following morning (Wednesday) at m/s -14.5bp.
The official comps list is as follows.
BYLAN 0.875% Sep-25 EUR 500mn 8.9y -17bp
LBBW 0.875% Sep-25 EUR 1,000mn 8.9y -16bp
BYLAN 0.750% Jan-26 EUR 500mn 9.2y -19bp
WLBANK 0.750% Feb-26 EUR 875mn 9.2y -19bp
DGHYP 0.375% Mar-26 EUR 500mn 9.4y -18bp
MUNHYP 0.500% Apr-26 EUR 750mn 9.5y -17bp
CMZB 0.500% Jun-26 EUR 1,000mn 9.6y -17bp
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.