Amadeus, rated Baa2/BBB, had held an investor call for a euro deal on October 5 but did not follow that up with a deal. The call came amid choppy markets and just a week or two before Amadeus went into earnings blackout.
“We were all aware that it was going to be a very narrow window, in what was shaping up to be a volatile October,” said a banker on the deal.
Last Friday, Amadeus posted its third quarter results. “They were a strong set of results that were in line with market expectations, so they used that to springboard into the market today,” said the banker.
The wait was worth it. Amadeus attracted a €4.75bn order book for the deal on Tuesday, making it the most popular deal of the day. Accounts from Germany, France and the UK all posted sizeable tickets.
Amadeus had no intention of raising over €500m, so went out with a firm no-grow transaction. The company is a modest issuer in both size and frequency. Its largest bond is a €750m five year deal, issued in 2011. Amadeus last came to the bond market in 2014 for a €400m three year 0.625% transaction. Those notes refinanced amortising bank loans, in line with the company’s active refinancing strategy between 2010 and 2013.
Bookrunners Barclays, BBVA, BNP Paribas, Crédit Mutuel, MUFG and UniCredit gave initial price thoughts in the 150bp area over mid-swaps before moving to a final spread of 135bp.
"It's an impressive result," said a banker away from the deal. "It was clearly a tough market at the time of the call. Pricing didn't seem to be as attractive to the issuer at that time, despite positive feedback. But they clearly made a wise decision to pick up dialogue with investors again and go now."
Plotting a curve presented a challenge, given Amadeus’s scarce issuance. As the two year notes were so short, accounts referred to other service sector names in the triple-B range, such as Capgemini.
Interpolating fair value of 115bp-120bp for a six year maturity from the sector comparables, the leads adjusted for Amadeus's 2017 notes to calculate a 10bp new issue premium.
The six year maturity was a natural step for Amadeus in extending its maturity profile, said the banker on the deal. Amadeus’s longest dated bank facility is a €1bn five year revolving credit facility.
Amadeus’s only other outstanding debt is €350m of European Investment Bank loans for R&D purposes.
Asset managers made up 64% of the book, banks 6%, insurance companies 17% and others 13%.
UK investors took 30% of the book, French 21%, German 19%, Spanish 8%, Benelux 6%, Italian 4%, Nordics 4%, and Swiss 3%.
For bond commentary from Francisco Urbano, director group treasury and corporate finance at Amadeus, turn to page 34.