Sole bookrunner, UBS, opened books for the September 2026 benchmark on Wednesday morning at 9am UK time with initial price thoughts of 125bp area. After 90 minutes the order book had grown to over €3bn and at 11am, when orders books were in excess of €5.75bn, guidance was set at 110bp area with the deal size fixed at €1.25bn.
Books closed shortly after with more than 300 orders worth over €7bn at a final spread of 105bp. The high level of demand was purely driven by the triple digit return over mid-swaps said bankers on the deal. “It’s the spread, it’s as simple as that,” said one.
"It was an absolute blowout," said another.
The order book could have justified a much tighter level, but a joint lead said this was not practically desirable. “As a frequent borrower, UBS needs to be seen to be fair, so it was obliged to price off its existing 2024’s,” said the same banker.
He added that a less frequent corporate borrower might have been able to price inside its own curve but UBS is obliged to take a more strategic approach to maintain a loyal investor base in readiness for its probable return to the market.
UBS syndicate said the transaction offered a minimal 7bp new issue concession. HSBC is considered a similar credit and the curve between its outstanding 2022 and 2027 maturities suggests the curve steepens 6bp per year.
UBS’s March 2024’s were trading at 82bp over mid-swaps, and with the 2.5 year extension to September 2026 an additional 15bp of curve meant fair value was seen around 97bp over mid-swaps.