Amount: Sfr250m
Maturity: 28 April 2014
Issue price:100.295
Coupon:1.75%
Spread at re-offer: 17bp over mid-swaps
Launched:Thursday 30 July
Payment date:28 August
Sole lead:Credit SuisseBookrunner’s comment:
A spread of 17bp was a little shocker to some of our clients, but the speed at which spreads have come in means this actually looks like good value. Nederlandse Waterschapsbank came last week at mid-swaps plus 9bp and now its targets are even tighter I think it would come at 5bp through.
People would like quality and they would love spread, but that is not easy to find any more. We tapped a CFF seven year at 44bp a few weeks ago, then Danske Bank did a five year covered bond at 65bp over and Hypo Investmentbank a three year at 42bp. Looking at the issuer’s targets, I’d guess a new seven year would come at 25bp-30bp. It has recently reopened three and five year deals in euros in the 50s over swaps, but the three to six month Swiss franc swap and the euro basis are both so this deal gave the issuer a similar all-in level.
Banks bought 29%, asset managers 17%, institutional investors 45% and others 9%. We had 50 orders.
Market appraisal:
"...it’s okay. At the beginning of March CFF was issuing four year paper at 105bp over swaps. But life has changed since then and this level now looks reasonable."
"...it looks okay spread wise. There is very, very short supply and hardly any issues. It is very difficult to get a deal from a foreign issuer to be attractive to investors because the cross currency swap is so expensive, but this is okay.
There is a market for covered bonds if they can achieve this."
