Guarantor: Fortis SA/NV, Fortis (NL) NV
Rating: A1/A+/A+
Amount: Nkr500m
Maturity: September 26, 2008
Issue price: 101.62
Coupon: 5%
Spread at re-offer: 95bp over the 6.75% January 2007 government
bond
Launched: Thursday August 7
Lead mgr: Fortis Bank
Bookrunner's comment:
We concluded this deal in 30 minutes from start to finish, which is indicative of how successful it was.
Fortis has a large outstanding issue, which is due at the end of August, so we have mainly seen redemption flows from those who want the same name and currency.
The transaction has gone well despite an adverse climate for the currency. Low interest rates are hitting new issuance hard and the golden days for Norwegian krone bonds are over. This has not been an easy year for anyone working in this market. Investors are not keen to get involved at these levels.
Pricing is in line with market expectations.
Demand came mostly from retail accounts in the Benelux, Switzerland and Italy and we expect to sell the deal down easily.
We chose a five year tenor to offer extra pick up. When the currency was doing better we would go for shorter maturities to match the inverted curve.
Market appraisal:
"...we have not started trading this bond yet and do not expect to see much interest, solely because the market is quiet.
This deal is unlikely to be as successful as Fortis' recent issue for GMAC, which was successful because it offered a generous spread. As the interest rates in Norway continue to drop, it would have been better for Fortis to have brought a similar deal to that instead of this.
And there have been so many double-A Fortis Nokkie offerings in the market that something different would have been more welcome."
"...as a leading financial institution, this borrower is a well known name in the Benelux. This will be attractive to investors but naturally we expect placement to be slower over this holiday period.
This is the only outstanding primary issue in Nokkie, which will undoubtedly have a positive knock-on effect to demand for this bond. Although interest rates in Norway are low at the moment, there is a fair swap rate differential, giving a pick up of about 1.3%. This is lower than usual, but still attractive to investors."
"...Fortis has a strong name and is well known in the retail market. This is a strange time for the market as it is so quiet, and the currency has been so volatile in recent weeks. This paper will gradually find its way into the retail investor base."
