Rating: A-/A-
Amount: Eu400m lower tier two capital
Maturity: 23 March 2016
Issue/re-offer price: 99.906
Coupon: three month Euribor plus 40bp until 23 March 2011; three month Euribor plus 100bp thereafter
Call option: at par from 23 March 2011
Spread at re-offer: three month Euribor plus 42bp
Launch date: Wednesday 8 March
Payment date: 23 March
Joint books: Citigroup, SG CIB
Bookrunners' comment:
We announced the deal on Monday as a Eu300m 15 non call 10 with a low to mid-40s over Euribor guidance, for the BBB+ rated credit.
The order book built nicely which was nice to see given the ratings the issuer carries and the fact that it is not the most well known and rated name. BPEM had visited the euro market before, but it was in June 2002 in a lower tier two deal with a June 2012 maturity.
At the end of the first day, we had a Eu300m book at the low to mid-40s over Euribor guidance, and orders kept coming in. Late on Tuesday we had Eu650m of orders at the price talk level.
We therefore shut the order book and announced a Eu400m transaction and revised guidance to 42bp-43bp. The order book remained strong, with little price sensitivity and we confirmed that the spread would be 42bp over.
Closest comparables were deals from BP Milano which was trading at 36bp over and BPU which was also bid at 36bp. These were shorter trades however and a new issue premium was required for BPEM.
The total book was shy of 60 accounts, and only three dropped out when we revised guidance tighter. The final book approached Eu650m.
Investors were keen to get some product with a little bit of spread and the name provided some nice diversification. Solid Italian sponsorship backed the deal, although we were able to sell 15% to Spanish investors and 8% to France to investors seeking diversification.
The accounts involved were not the traditional buyers of subordinated FRN paper. Instead accounts that have been buying tier one, upper tier two paper took a more defensive view on the market and therefore participated.
Banks, fund managers and insurance companies were the main participants.
