Tesco ‘corporate covered bond’ three times done

03 Feb 2011

Tesco Property Finance’s fourth capital markets outing was a blowout success, with an orderbook three times oversubscribed, and 123 orders in the book. The £685.1m 22.4 year expected life bonds are fully backed by Tesco, but if Tesco goes bust, investors have recourse to the underlying assets.

Bookrunners Goldman Sachs, HSBC, and JP Morgan priced the deal with a coupon of 5.8006%, which was 140bp over the 4.25% 2032 Gilt, from guidance of 140bp-150bp over.

“Tesco secondaries were at around 130bp over Gilts when we announced, so we offered a new issue premium that the ...

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