Amount: Eu500m
Maturity: March 28, 2008
Issue/re-offer price: 99.939
Coupon: three month Euribor plus 15bp
Spread at re-offer: three month Euribor plus 20bp
Launched: Wednesday March 12
Joint books: BNP Paribas, UBS Warburg
Bookrunners' comments:
BNPP - Erste Bank was 20bp all-in, which is where it was sold. This is a good issuer to do deals for because it is prepared to pay the price necessary to get the deals sold.
In the present situation, especially with what is going on in corporates, getting Eu500m done for a single-A name is a good result.
Erste has a loyal investor base in German speaking countries. The best takers were the German and UK floating rate note buying communities, and apart from that we also sold to Benelux, France, Spain and Scandinavia, which took close to 10%.
Erste trades relatively tight for a single-A bank, so the best comparables are its own deals. It has a two or three year at around 17bp and this new five year is bang in line. There is no premium.
UBS Warburg - This was a successful transaction in what turned out to be volatile markets.
The bonds were placed at 20bp over Libor and we had broad distribution with solid interest from Scandinavia and southern Europe, the Germanic bloc was also very prominent. Erste trades well because investors like the defensive nature of its paper and the upside of its expansion into eastern Europe.
The May 2007 was 17.5bp over, and there was a 2006 at 16bp over. There is a bit of a credit curve, which meant that this came a little bit wider.
Market appraisal:
"...this transaction was priced a little on the tight side at the all-in level of 20bp over mid-swaps.
We saw good demand from the co-operative sector, but it took a long time to build the book and the issue was definitely not the blow-out the borrower had expected. This was a tough deal."
"...this was a good deal, which was well priced. There is lots of demand for floating rate note paper, especially in the five year area.
Erste Bank is a strong name, which tends only to come to the market once a year with a reasonably sized issue.
The pricing was correct for the rating and the type of bank. We placed most of our paper in France."
