Vesteda, rated BBB by Standard & Poor’s, brought the €300m no-grow seven year notes to market after a three day European roadshow ended on October 16.
Bookrunners ABN Amro, BNP Paribas and Rabobank went out with initial price thoughts in the 200bp area over mid-swaps before giving guidance of 195bp-200bp at 11am, when the order book went over €500m. The leads then tightened pricing to 195bp. The coupon was 2.5%.
“We knew we weren’t going to move it massively, we moved it by 5bp last year and did the same this time,” said a banker on the deal.
Vesteda last came to market with a €300m unsecured offering in July 2014. That bond moved from initial price thoughts of 130bp over mid-swaps to 125bp.
Most investors in Vesteda’s debut bond came into the second deal, some with smaller tickets than before, said the banker. New accounts also played in the offering.
“It’s a €300m sub-benchmark trade, so not everyone’s cup of tea, but it still reflects the market," he added. "People are getting involved and working constructively.”
The new issue premium was around 25bp, according to a banker on the deal, and 30bp according to a banker away from it.
The leads used secondary market prices for Vesteda’s outstanding notes as well as other corporates’ curves, including Deutsche Annington's, to estimate fair value at 170bp.
The final order book was €535m, with 74 tickets.
UK investors took 37% of the bonds, Germans 15% and French 14%. Vesteda's domestic investors also strongly supported the deal. The UK-heavy book highlighted that investor base's liking for the real estate sector, said one bookrunner.
Tuesday’s only other trade, UK property firm Hammerson’s £350m offering, won love from the UK too. The deal was a hit with sterling investors. The issuer received positive feedback from both euro and sterling lenders but went for the latter after they showed more interest, said a banker on that deal.
Vesteda had been considering seven and eight year tenors, but decided that seven years was the more cost-effective tenor, said a banker on the deal.
Proceeds will refinance a bridge facility due in December 2015 and support general corporate purposes.
The deal also marks a second step in Vesteda’s strategy to completely switch from secured to unsecured funding.
Vesteda had a €3.6bn portfolio of around 22,900 residential properties by the end of 2014. It is the largest Dutch residential property fund.