VGP, rated BBB- with Fitch, opened books on an April 2029 green deal at 190bp-195bp over mid-swaps. JP Morgan and KBC were coordinators, with Belfius and BNP Paribas joining as active bookrunners.
“Logistics is one of the sectors that has done well out of Covid,” said a syndicate banker off the trade when it was at guidance, in reference to the increased demand for internet shopping in an age of social distancing. “I wouldn’t be surprised if this does very well.”
This forecast turned out to be correct. Leads put the expected size at €500m, but as demand ticked up, hitting €1.5bn at 170bp over mid-swaps guidance and then €1.6bn by the time the deal was launched, they increased the size to €600m.
At the same time, the spread was tightened to 165bp over mid-swaps. This was roughly flat to fair value, according to a lead, though with any debut trade, fair value is a nebulous concept.
The trade came a day after the UK’s Canary Wharf Group, rated Baa3/Nr/BBB-, sold its debut bonds, heading to sterling for a benchmark and also printing a sub-benchmark in euros.
The issuer raised £650m across 2025 and 2028 maturities and €300m at a 2026 maturity.
Elsewhere in Wednesday’s primary market, Dŵr Cymru Welsh Water sold class ‘C’ subordinated debt at Baa2/BBB/BBB+ rating.
The class C debt is subordinated to class B debt. It “offers loss absorption capacity to senior secured creditors […] with an option to defer interest payments and cannot create an event of default for the senior secured debt”, according to S&P.
The borrower started marketing the March 2034 trade at Gilts plus 150bp via Barclays, BNP Paribas and NatWest Markets. Leads cut the spread by 20bp, to launch the trade at 130bp over for £300m, from £950m of demand at the most recent update.