Maturity: March 12, 2010
Issue price: 101.015
Fixed re-offer price: 99.44
Launched: Wednesday March 5
Joint books: Citigroup/SSB, RBC CM
Citigroup/SSB - Eu400m is clearly on the small size in the context of some of the high quality deals that we have been seeing lately, but the amount suited the issuer.
The transaction was aimed at taking advantage of some of the retail demand that we have been seeing - there continues to be an appetite for quality names and for new credits.
The seven year maturity is also popular, as we have seen recent successes for TMCC and GE in this tenor and retail investors are clearly willing to extend to this part of the curve for the extra yield.
Ontario has never issued in euros in public format, but although this was a debut, it was not expected to be a broadly institutional exercise. We did not expect to sell out on the first day, but were confident that Ontario's quality, its rating and familiarity to retail would mean that it would be a comfortable sale.
The result has been a transaction that has attracted the widespread of the target audience, going on buy-lists and a strong retail bid.
We were also pleasantly surprised to see institutional participation because of the credit and its rarity. We marketed the deal overnight in Asia before launch and picked up some demand. We also saw some UK institutional interest.
At mid-swaps less 2.5bp, the pricing cannot be said to be cheap versus comparables, but given the rarity of the credit, we are confident that it will perform over time. It is now (Thursday afternoon) re-offer bid.
RBC CM - There is only one Canadian province with outstanding paper in the euro market, namely Quebec, which trades at a different level than other provinces.
Institutional and retail investors expressed interest in a new, top quality name, and Ontario was interested. We chose a seven year maturity because that is where we saw most demand. With interest rates being so low, investors are looking out a little longer and selling the 2005 and 2006 issues.
This issue saw good sales on day one for what was essentially a retail targeted transaction. Indeed, we managed to place about half the paper. The deal is trading at bid on the re-offer side and the bonds are selling out.
We had good tickets from Switzerland, the Benelux, Germany, Austria, Italy and the UK.
"...we had Eu20m as a co-manager and have placed small tickets to Italy, Belgium, Luxembourg and the Netherlands. We are a little more than half done and expect to be sold out by early next week at the latest.
The name is an interesting one in euros. We saw the more frequent Quebec recently in euros and that went well. This is a little bit shorter and a touch on the expensive side, but investors are keen to buy it and we were pleased to be able to participate."