Barclays, Deutsche Bank, Erste Group, LBBW and Société Générale have been mandated to arrange investor meetings which will take place between September 17 and 23.
“The Austrian issue is resolved to a certain extent and the market has demonstrated that it is willing to buy the Austrian story,” said a Frankfurt-based syndicate banker away from the deal. “I would have no problem recommending a mortgage bond from an Austrian issuer.”
In May this year, Moody’s downgraded Pfandbriefbank, Hypo Vorarlberg, Hypo Tirol and Hypo Noe after the Austrian regional banks publicly announced their commitments to guaranteeing Heta’s debt. However, this had no impact on each issuer’s covered bonds.
Austrian covered bonds started to perform in May despite the debt moratorium announced by Heta.
And while Austrian covered bond issuance has resumed, a strained deal by Hypo Noe on Friday last week perhaps suggests that investors’ concerns have not yet been put to bed.
Hypo Noe printed a €300m transaction which a representative from the bank said was the largest the collateral pool would allow. While some bankers said that the deal is an indicator of investor reticence, others say the issuer was just unlucky.
“Hypo Noe was unlucky I think,” said the banker. “The five year was the wrong maturity for the market and the timing wasn’t great.”
As a small second tier Austrian name, the representative from the bank said that educating investors in a matter as complex as Hypo Noe’s relationship with Heta had been difficult. He also added that several investors would have picked up Erste Bank and UniCredit Bank Austria.
Hypo Noe has a greater exposure to Heta than Hypo Tirol.
Other Austrian issuers have come to the market more successfully. Erste Bank and UniCredit Bank Austria both printed successful transactions last week. Erste came with a €500m 0.375% 2020 at 3bp over mid-swaps and UniCredit Bank Austria printed a €500m 0.75% 2022 at 5bp over.
The first banker added that while mortgage-backed bonds were certainly palatable, public sector bonds were still very much off the table.