Guarantor: Natexis Banques Populaires
Rating: A2/A-
Amount: $200m tier one capital
Maturity: perpetual
Issue/re-offer price: 100.00
Coupon: 7.375%
Call option: at par from 27/10/09
Launched: Thursday October 9
Joint books: BNP Paribas, Citigroup, Natexis Banques Populaires
Bookrunners' comment:
BNPP - We were pleased that we got the deal priced at the right size and the right coupon. This was a classic retail transaction. About 90% of our orders were from retail accounts. The average increase in the size of the order book was about $15m a day, some days a bit more, some days a bit less. At that pace, it takes a while.
Also, we had a holiday in the Asian region. It was National Day in China and Hong Kong on October 2.
Investment decisions often take less time in Asia than they do in Europe, so it is important to get Asian investors into the book because you get momentum. There was a period in which the focus was on holidays, but the average amount of daily orders was $15m.
In the last couple of days there was an acceleration because people had heard that the subscription would close.
At 7.375%, the coupon is exactly what we said it would be when we started the process.
About a third went to Asia and 10% went to the Middle East -largely the Emirates, Dubai and Bahrain, and Lebanon. In Europe the support was from the usual centres of Switzerland, the Benelux and Monaco.
This was a good deal. We had an exceptional situation in the first six months of the year and you cannot benchmark by looking at the hype of the first half.
This deal is a positive signal to the market that these deals can get done and that you should focus on banks with retail networks, because otherwise it is next to impossible.
Citigroup - The market has clearly changed. This being the first deal since two difficult trades, we were to an extent re-opening the market and discovering what was out there.
This is a very different market to previously, and there are a lot of things driving it - Treasuries, dollar rates, the equity market recovery, particularly the Hang Seng. These deals now take weeks rather than days. Those deals were probably 80% into Asia, this was a third into Asia.
We had a $240m book and it came together very well. The retail component was around 90%. The large institutional component was one major reason for the difficulties of those two deals.
This was classic retail demand of the sort that we saw before the spurt at the end of last year and the beginning of this.
We last saw the bonds at 100.10-100.35 (Thursday).
There is a smaller market. There is a good core retail bid out there, but you are not going to see $2bn deals.
Natexis BP - We had a $240m order book for this $200m transaction, which was a good one. It was a long process because we wanted to focus on retail. We had 90% retail and only 10% institutional. Asia was about a third, 10% went to the Middle East, and the rest was Europe.
In the end, the deal was more European than Asian, but nevertheless it had strong Asian participation.
There are some better rated comparables, such as Crédit Agricole and BNP Paribas. Natexis Banques Populaires is A2/A- in tier one. BNP Paribas was trading at around 7.00% and Crédit Agricole at around 6.95%.
Market appraisal:
"...Natexis took some time. It shows how much slower retail deals have become. But it is positive that they could get it done."
"...the days when you could get $2bn books in four or five days are gone. There are a number of reasons for that, but convincing people that those days are gone is an important step."