Relx, the UK professional information company, and JAB Holding, the German consumer products investment company, brought BBB+ rated bonds in euros on Monday, at notably differing spreads.
Relx, rated Baa1/BBB+/BBB+, offered an eight year bond at initial price thoughts of 120bp over mid-swaps via ABN Amro, Commerzbank, JP Morgan, Société Générale, TD Securities and Wells Fargo.
At the same time, JAB Holding, which has the same ratings, opened books for a €500m no-grow 10 year at 235bp.
That deal was led by Bank of America, BNP Paribas, Crédit Agricole, MUFG, Santander and SMBC.
JAB owns stakes in several consumer-facing companies including Keurig Dr Pepper, JDE Peet's, Krispy Kreme Doughnuts and Pret a Manger.
“A holding company is a bit more complex at the moment, so it trades wide to its rating,” said a syndicate banker in London. Investors are looking for “simple names they know well” in the primary market, he added, as inflation is still not tamed in Europe and the spectre of recession, while it has faded, still lurks in the background.
Other bankers have made similar observations in recent days – that issuers with an easy story to sell will probably do better than more nuanced credits.
However, IPTs of more than 200bp were “eye catching”, the banker added. “It’ll get done, and probably have a good amount of demand in the book,” he said.
JAB found €2.9bn of pre-reconciliation demand for its trade, making it one of the most in demand on a busy Monday in the corporate bond market.
The spread was tightened to 205bp over mid-swaps.
However, Relx was the star of the show on Monday, pulling in €4.5bn of demand at peak, before the book ended at €3.6bn, the biggest of the day for a euro corporate bond.
The €750m deal was tightened 40bp to 80bp over mid-swaps, the joint deepest spread tightening of the day alongside an 11 year green trade by Dutch grid operator Enexis.
When it comes to spread, “rating matters less than how well investors know your name at the moment”, said a debt capital markets banker in London.