Senior unsecured Swiss franc issuance has dwindled this year, with domestic buyers shying away from any non repo-eligible, Eurozone-related FIG name. Only top-rated European banks such as Nordea and Rabobank have managed to tap the market in 2012, as well as Australian, French and New Zealand covered bond issuers, which have dominated the FIG scene of late.
Of the few private banks to tap the Swiss franc market, LGT Bank is one of the better known names, with six outstanding lines in the currency after Tuesday’s transaction. The bank’s split Aa3/A+ rating did not deter buyers, which focused mainly on their familiarity to the brand name in Switzerland.
Strong investor demand allowed lead managers Credit Suisse and LGT Bank (no books) to reach the Sfr250m cap, from an initial Sfr200m announced deal size, in just over an hour. The leads said the deal could have grown further had the issuer not limited the final volume.
LGT Bank’s appeal was widespread, with private banks taking a third of the book and institutional demand from insurance companies strong at 25%. Credit Suisse internal demand followed at 24%, with asset managers taking the balance.
The seven year maturity, which was slightly longer than investors’ ideal spot at the midterm part of the curve, was key to achieve the 2% coupon and yield, and maximise traction amid the Swiss franc low rates environment.
Tuesday’s trade came at 142.5bp over mid-swaps, which, similar to the deal’s tenor, was a function of the 2% coupon. LGT Bank paid around 5bp in curve extension as well as a slight new issue premium over its outstanding 2017s, which were trading at 120bp-125bp over on Tuesday.