Maturity: December 30, 2008
Issue price: 101.306
Fixed re-offer price: 99.681
Spread at re-offer: 44bp over the 2.625% May 2008 UST
Launched: Thursday June 26
Joint books: Citigroup, Daiwa, RBC
Daiwa - The dollar market is clearly well bid. The performance of other transactions such as that for the UK has paved the way for some of the less aggressive triple-A names to come to the market. We were able to bring Nederlandse Waterschapsbank at 44bp over the May 2008 Treasury for a 2008 maturity.
The deal was handled by the three bookrunners without a syndicate and we will work it down over the next few weeks with European retail. We are also expecting some Asian tickets but the issue was not targeted to that region.
This issue at just under Libor represents value when compared with issues like the BNG September 2008s trading at Treasuries plus 31bp, which is Libor minus 10bp, Sweden 3 December 2008 trading at 24bp-23bp or Libor minus 23bp and the UK trading flat to minus 1bp or Libor minus 34bp. Nederlandse Waterschapsbank has come at just under Libor.
The 2.75% coupon is reasonably attractive in this low yield environment.
RBC - We have had good flow through in a number of areas of the curve from Europe and Asia. People are focused on Asian central bank demand for bigger, longer dated deals but we have seen good flows of dollar product into small European funds and retail for current coupon sub-par paper.
The response to the issue was positive. We had some good institutional orders as well. We expect to place the balance with retail over time.
The $500m size was felt to be the right one for the issue. There are a lot of bigger deals in the market and we did not want to have an overhang of paper as we like to see our deals tighten.
At 44bp over Treasuries, the issue represents good value compared with such issues as Sweden, which is trading at 25bp through, Italy, which will price tomorrow (Friday) at minus 10bp and BNG at minus 7bp-8bp. Waterschapsbank at minus 5bp offered an attractive pick-up.