Adler will be offering five and eight year unsecured issues in Reg S-only format, following a global investor call and individual presentations kicking off on Wednesday. JP Morgan is sole global co-ordinator, joined by Barclays and Deutsche as bookrunners.
The offering will fund an any-and-all tender for Adler Real Estate’s 1.5% December 2021.
The issuer was last in the market in November, executing intraday on November 9 — the day the Pfizer vaccine news hit markets. That €400m six year issue, with the same banking group, was priced at 3% yield from 3.625% price thoughts. Markets have tightened since though, and the new five year issue could sneak under the 2% mark, according to one investor.
This bond followed a hectic year for the group. Early in 2020, ADO Properties bought Adler Real Estate, creating the Adler Group, and later in the year, in several stages, the combined group took over Consus Real Estate.
It launched a €450m rights issue in July, in part to pay off Consus’s expensive bonds — it raised a 9.625% issue in October 2019.
Adler’s new issue is likely to attract interest from investment grade-focused bond buyers, with its BB+ rating with S&P putting it in prime position to add some juice to IG portfolios.
That means the print will be of limited use for levfin syndicate managers monitoring the market ahead of an expected busy January for executing buy-out deals.
Underwritten debt packages backing multibillion M&A deals including Asda, the AA, and Ineos’s purchase of BP’s aromatics and acetyls business are expected to hit the market soon, but these will likely require more extensive marketing than Adler’s issue. Most of the new M&A-driven supply will be more highly levered, with new capital structures, new deal documentation and, in the case of Asda, a new borrower entirely.
Wednesday’s Epiphany holiday in parts of Europe may also be encouraging some banks to pause before announcing their more credit-intensive mandates.
Adler’s deal follows a €1bn seven year issue from Baa1/BBB+ rated Grand City Properties on Tuesday. Though this is rated much higher than Adler, it is also a Luxembourg-based German property developer, and the bond issue features similar real estate-related covenants.
Grand City’s deal was priced at 0.393%, or 80bp over mid-swaps, from IPTs of 110bp-115bp.