Instituto de Crédito Oficial has not been shy to venture into new territory this year.
Not only did the borrower issue its first 10 year euro transaction and its first Samurai, but it also took the unusual step of awarding the mandate for a dollar benchmark to one bank, JPMorgan.
On top of these deals ICO has sold several other benchmarks and private placements, both in core and niche currencies.
Antonio Cordero, head of capital markets at ICO in Madrid, is happy with the way things have turned out.
"At the beginning of the year it was really quite a challenge, but now with the benefit of hindsight we can say that markets have been working pretty well especially the euro market, but lately the dollar market is also in stronger shape," he says. "Weve netted so far around Eu12bn out of a target of around Eu16bn, so weve done around three-quarters of our funding programme and were on the right track."
He is in no doubt as to what the issuers most significant deal has been.
"With regard to what I would consider the most outstanding transaction, I would point to the 10 year euro, because it was the first time weve issued a 10 year euro note," he says. "Its always good to do something new that may add value to our investor base. It was Eu2bn, 10 year, good demand, so I think it would be one of the deals that we feel really proud of."
The issue size, capped at Eu2bn, was subscribed after just one hour. Initial guidance of 90bp-95bp was quickly revised to plus 90bp but the tighter level failed to dampen investor enthusiasm and the book quickly rose to Eu3.6bn.
With little price sensitivity in the book, the deal was priced at 88bp, which represented a premium of around 38bp over the sovereign.
Another landmark for ICO was its debut Samurai bond.
The borrower kick-started the Samurai market when it printed a ¥50bn dual tranche transaction at the start of the fiscal year in April. Lead managers Daiwa SMBC, Mitsubishi UFJ and Mizuho had originally marketed a floating rate deal, but a fixed rate tranche was added after strong investor demand. In the end, the ¥27.1bn floating rate tranche was priced at six month yen Libor plus 68bp, while the ¥22.9bn fixed rate tranche was priced at the re-offer of yen swap rate plus 50bp, which translated to a fixed coupon of 1.67%.
"It was a smaller transaction, but it was a laborious process bringing this transaction to the market in terms of documentation and putting in place our Samurai programme," says Cordero. "But once you have your deal in the market its quite a rewarding feeling."
ICO issued a Samurai transaction about 10 years ago, according to Cordero, but that was a structured deal.
In July, ICO took the unusual step of awarding the mandate for its $1bn three year benchmark solely to JPMorgan.
Other banks were reportedly trying to sell the deal at 145bp over mid-swaps, but after mixed feedback from investors told the issuer it would need to pay 60bp over. JPMorgan then stepped in and sold the deal at 50bp over.
Several banks told EuroWeek at the time that the bulk of the deal had been absorbed by JPMorgans own treasury, but the distribution statistics suggested otherwise, with just 20% allocated to banks, while 45% was sold to central banks, 28% to asset managers and 7% to pension funds and insurers.
JPMorgan also placed a $1bn one year private note for ICO in February. Although this has been the borrowers largest private placement this year, it has sold some other chunky MTNs.
Credit Suisse placed a $750m 15 month note in February, Calyon placed a Eu500m three year FRN in July, and La Caixa placed a Eu300m two year deal in June.
It has also issued numerous other private placements between $100m and $400m equivalent in dollars, euros, sterling, yen and Swiss francs. In addition, ICO has issued some smaller private placements in the core currencies and Norwegian krone.
ICO hopes to continue with a diversified funding strategy, including potentially issuing its first Kangaroo of the year.
"Weve always tried to diversify our funding sources, trying to tap different markets and using different currencies," says Cordero. "And I have to say that this year it has been quite challenging in some cases. For instance we havent yet done any Australian dollar transactions, whereas in the past since 2005 when we set up our Kangaroo programme we have constantly been doing Kangaroo issues. The year has been pretty challenging and the result is that we havent managed to do any Aussie dollar transactions yet, although I hope that it will change in the last quarter of the year."
It may also return to the Samurai market, as well as issuing further benchmarks.
"We expect to do at least another two euro benchmark transactions and another dollar deal," says Cordero. "They will likely range in maturity from three to five years. We would also love to repeat our experience in the Samurai market, so we will also look at what we can do in this market."