From feast to famine, winners found a way
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From feast to famine, winners found a way

It was a year of two halves, as bond market dynamics fundamentally changed after quantitative tightening began. These corporate deals are outstanding for either pushing limits and taking advantage of conditions at the start of 2022, or for navigating some of the toughest markets in over a decade.

Corporate Bond of the Year

GSK Consumer Healthcare Capital/Haleon

€850m 1.25% March 2026

€750m 1.75% March 2030

€750m 2.125% March 2034

£300m 2.875% October 2028

£400m 3.375% March 2038

$1.75bn 3.125% March 2025

Bank of America, Barclays, BNP Paribas, Citi, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Mizuho, Morgan Stanley, Santander, Standard Chartered

A barnstorming debut across all three major currencies saw Haleon land a well deserved win for corporate bond of the year.

The consumer health spin-off from GlaxoSmithKline did all the right things in March to ensure it got the sums of money it needed in what was then considered to be a tricky market — though of course conditions became much tougher when central banks started quantitative tightening.

Haleon’s deal rises above the rest with the sheer size and scope of its debut. It could not just lean on goodwill from being linked to GSK — it is rated a full two notches lower. Leads took the traditional route of a roadshow before opening books, telegraphing the trade and letting investors prepare for the new credit, and this was rewarded in Europe with books of €13.5bn and £4.5bn by the time final terms were announced.

Being a debut makes it difficult to pin down where fair value was, though sector comparables at the time put the new issue concession across all European tranches at zero to negative.


Corporate SRI Bond of The Year

L’Oréal

€1.25bn 0.875% June 2026 sustainability-linked bond

€1bn 0.375% March 2024

€750m E+70bp March 2024

BNP Paribas, Citi, Crédit Agricole, Deutsche Bank, HSBC, JP Morgan, Natixis, Société Générale

L’Oréal issued its first ever bond in 2022, with the biggest and longest of the three tranches being sustainability-linked. It stuck to short maturities as it is very cash generative and the bond was a one-off — to refinance a €4.5bn bridge loan that it raised to buy back 4% of its shares from Nestlé.

But it still managed to make a statement, building on its sustainability-linked loans signed a year earlier. It has pledged to achieve, by December 31, 2025, zero greenhouse gas emissions at its own sites; a 14% cut in ‘cradle to shelf’; and using 50% recycled or bio-based plastics in its packaging. It will not pay a step-up coupon, but instead agreed to make an additional principal payment of 12.5bp for any of the three targets missed.


Dollar Corporate Bond of the Year

Magallanes, Inc (Spinco) 

$1.75bn 3.428% March 2024

$500m 3,528% March 2024

$500m Sofr+178bp March 2024

$1.75bn 3.638% March 2025

$500m 3.788% March 2025

$4bn 3.755% March 2027

$1.5bn 4.054% March 2029

$5bn 4.279% March 2032

$4.5bn 5.05% March 2042

$7bn 5.141% March 2052

$3bn 5.391% March 2062

Barclays, Goldman Sachs, JP Morgan

The dollar bond market is well known for stumping up eye-popping amounts in single deals, but even with that in mind, the $30bn 11 tranche trade for Magallanes was stunning in size.

The borrower is the entertainment spin-off of AT&T and Discovery, and hit the market just days before the Fed started to lift interest rates.

This was a masterclass in preparing the market for a jumbo, event-driven deal. The bookrunners drummed up interest from 200 accounts and saw orders peak at $107bn, thanks to a well telegraphed transaction that investors had been preparing for since May 2021. That was when the spin-off was announced in a deal that included $41.5bn of bridge loans from Goldman Sachs and JP Morgan.

As well as the sheer size of the bond, the issuer ended up paying new issue concessions of 20bp for the longer tranches and 25bp for the shorter maturities — only around 10bp-15bp back from where the best loved frequent issuers were paying at the time.


Sterling Corporate Bond of the Year

Northumbrian Water  

£400m 6.375% October 2034

Bank of China, Barclays, RBC Capital Markets

While there may be bigger sterling trades over the year, it is hard to think of any that came at such a unique point of upheaval and volatility centred around the UK than Northumbrian Water’s 12 year trade.

It announced its deal hours before then UK prime minister Liz Truss resigned. This was the first sterling corporate deal after then chancellor Kwasi Kwarteng’s disastrous mini-budget that sent Gilt yields soaring and sterling freefalling against the dollar. It is hard to underestimate the catastrophic effect this had on UK markets. Bankers were writing off the sterling market until at least November, if not the rest of the year.

Northumbrian Water and its leads were not in the mood to be shaken by the noise. The issuer pushed ahead and opened books the day after Truss’s exit — a choice made all the more adventurous because it was a Friday, a day typically void of trades in the European corporate bond markets.


Best Euro Bond Issued by Non-European Company

Medtronic

€500m 2.625% October 2025

€1bn 3% October 2028

€1bn 3.125% October 2031

€1bn 3.375% October 2034

Bank of America, Barclays, Citi, HSBC

US company Medtronic settled nerves across the European high grade corporate bond market in September when it proved that ambitious, multi-tranche deals could still be successful despite whipsawing volatility.

The medical equipment firm was the first to bring more than two tranches in the September window, with Siemens the last to do so in August. A trend then began of investors snapping up the longest tranches when given the choice from an issuer they like. Medtronic’s deal was SEC registered, so book sizes were kept private, but the longer two tranches shaved 30bp off the spread in bookbuilding, while the shorter two tranches had to settle for 25bp coming off, indicating demand was higher the further out along the curve.

This was novel at the time — amid volatility investors usually prefer shorter maturities — and set the stage for the likes of Adidas and Schneider Electric.

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