Rating: Aa3/AA-/AA-
Amount: €1bn Reg S only
Maturity: 13 February, 2025
Issue/reoffer price: 99.819
Coupon: 1.125%
Spread at reoffer: mid-swaps plus 40bp; 81.9bp over the 0.5% February 2025 Bund
Launch date: Tuesday, February 6
Payment date: February 13
Joint books: BBVA, Crédit Agricole, HSBC
Borrower’s comment:
We are extremely pleased and the transaction beat our expectations, especially given such a volatile market. This was our biggest euro-denominated benchmark. [The worsening market conditions] made us think. But our feeling overall was that primary debt markets were still solid even though equities were suffering.
Bookrunners’ comment:
We announced the trade on Monday morning London time planning to price on Tuesday, and then saw US equities have their worse day since 2011. But credit markets, though weaker, avoided the panic in equities.
We started initial price thoughts at low to mid 40s over mid-swaps. We then tightened official guidance on Wednesday to 43bp over mid-swaps before launching a €1bn deal at a spread of 40bp. The final book was over €1.2bn. I’d put the new issue premium at 6bp, but the volatility made finding an exact number tricky.
Geographical distribution
Eurozone 61%
UK 15%
Switzerland 12%
Asia/MENA 6%
Nordics 3%
Americas 3%
Distribution by investor type
Fund managers 53%
Insurance/pension funds 20%
Central banks/official institutions 14%
Banks 10%
Other 3%
Market appraisal:
“…a very good result considering the market backdrop. It was definitely wider than what they could have done last week but everything is a little wider and it’s only a question of a few basis points. I’d say the new issue premium was approaching 10bp, although it’s hard to say given the lack of very liquid reference points in euros. With a funding plan like that you must take into account the risk involved and the importance of doing a benchmark so early on. It is a sign of strength that they could do €1bn at historically tight levels in a week like this.”
“…it’s impossible to say whether it was the right choice to come despite the volatility. But anyone complaining about that choice is just looking for reasons to criticise. You cannot judge this today; you need to wait a few weeks to see what happens to spreads. My hunch would be that there’ll be some repricing across markets and that CAF’s spreads will be wider in three weeks, which would make this trade look very good indeed. Even if they’re not wider, it was still a wise decision.”
