Maturity: Perpetual. Callable from November 7, 2016. If not called coupon steps up by original swap spread + 100bp
Issue/reoffer price: 99.375
Spread at re-offer: 221.5bp over the 4% 4 July 2016 Bund
Launched: Tuesday 31 October
Payment date: 7 November
Lead mgr: BNP Paribas, UBS
The market is in fantastic shape and everything is flying out the door. This deal was no exception. OTP got a terrific reception on the roadshow. The bank was on the road in September for its lower tier two issue, so we took this as an opportunity to get them in front of fund managers in the core centres for bank capital — London, Frankfurt and Munich, and the Netherlands.
Of course, we fielded a lot of questions about OTP's expansion plans but also questions around the macro situation in Hungary. On the whole, people looked through the headlines so that what was going on in the streets had no price implications for OTP.
On Friday October 27, we went out with guidance of 215bp area over mid-swaps and got good traction on the deal. We closed the books on Monday and revised guidance to 200bp-210bp over mid-swaps.
On Tuesday, with the book 4.1 times covered, we priced the Eu500m transaction at the tight end. The trade was notable because it was positioned to the high-grade audience and we held on to those funds through the price revision.
The deal was structured as a fairly standard euro upper tier two, but we needed quite a bit of negotiation with the regulator to get there. This is the first hybrid capital instrument from a Hungarian issuer, the first public hybrid capital bond from central and eastern Europe and the largest hybrid capital instrument out of the CEE.
It was a novel transaction and well received.