Prosus, the Netherlands-based e-commerce and fintech investment arm of South African publisher Naspers, demonstrated again the strong bid for short dated corporate debt on Wednesday, when it priced the euro leg of its $5bn-equivalent dual tranche raid on the bond market.
The Baa3/BBB rated company had gone to the dollar market the day before, raising $1bn each of five, 10 and 30 year cash via BNP Paribas, Citigroup, Deutsche Bank and Goldman Sachs, following a roadshow on Monday.
Prosus did not go as long with its euro offerings, choosing tenors of four, eight and 12 years, nor as big, raising just €1.75bn (about $2bn) across the three tranches, though it was still the largest corporate deal of the day in the currency on Wednesday, just pipping Snam's €1.5bn dual tranche offering.
Prosus, which has been on a buying spree recently, said it would use the proceeds of the dual currency deal to fund acquisitions and investments.
Last summer, it closed its $1.8bn acquisition of coder forum Stack Overflow in the US, just a month before announcing a deal to acquire Indian payments platform BillDesk for another $4.7bn.
Prosus priced its five, 10 and 30 year dollar bonds at 175bp, 245bp and 290bp over Treasuries, achieving the most dramatic tightening on the five year tranche, which had been touted at initial price thoughts of 215bp.
A similar dynamic was in evidence on the euro tranche, where almost half the €6.75bn of orders went to the three year tranche.
No room for complacency
"It's obvious that investors are going to be cautious, given the backdrop," said a syndicate banker in London on Wednesday. "The energy crisis, inflation, Russia. Corporate bonds seem to be working, but you can't be complacent, especially with larger deals."
These nerves, combined with heavy supply this week, have contributed to steadily growth in new issue premiums on investment grade deals, especially at the long end.
Prosus was able to tighten the pricing on its three year euro bond from 155bp over mid-swaps to 120bp, leaving about 10bp-15bp on the table, according to a second banker away from the deal.
The concession on the longer tranches was arguably 10bp bigger, with pricing coming in at 183bp on the eight year and 233bp on the 12.
"They were a bit more generous," said the banker. "If you want to get size done, you probably have to push, but the trade should be well liked, especially as the overall backdrop this morning so far has been supportive."
The final order book for Prosus' three year bond was €3.25bn, while the other tranches drew €1.75bn each. However, the issuer chose to sell a larger amount of eight and 12 year notes, setting the sizes of the tranches at €500m, €600m and €650m in ascending order of tenor.
Sustainability-linked debut
Snam's deal also fit the pattern, in as much as the €4.25bn order book for its €1.5bn dual tranche offering was skewed to the shorter of the two tenors on offer.
It was the Italian natural gas utility's debut sustainability-linked bond offering, after repeated issuance of transition bonds based on a defined use of proceeds.
Barclays, BNP Paribas and Goldman Sachs were global coordinators and ESG structuring advisers. The full list of bookrunners also included Imi-Intesa, Mediobanca, Morgan Stanley, Société Générale and UniCredit.
The leads went to investors with initial price thoughts of 85bp over mid-swaps for a June 2029 (7.5 year) and 105bp for a June 2034 (12.5 year).
Guidance came in at 60bp-65bp and 80bp-85bp and the Baa2/BBB+/BBB+ rated bonds were priced at the tight ends of those ranges, implying a roughly 15bp-20bp new issue premium, according to a banker away from the deal. Unlike Prosus, Snam went with the flow of demand, sizing the 7.5 year at €850m and the 12.5 year at €650m.
Long and short of it
All in all, it was another busy day in the euro corporate bond market. Ireland's Electricity Supply Board (A3/A-) printed a €500m 12.5 year conventional bond at 60bp over mid-swaps from more than €2.2bn of demand via BBVA, BNP Paribas, Danske Bank, JP Morgan and Soc Gen, while Hungarian low cost airline Wizz Air (Baa3/BBB-) priced a €500m four year at 105bp through Barclays, BNP Paribas, Citigroup and JP Morgan.
The magic of the short end appeared to be at work on Wizz Air's trade, which racked up a €3.25bn book.
