Maturity: January 22, 2008
Issue/re-offer price: 99.889
Spread at re-offer: 55bp over the 3% November 2007 UST
Launched: Wednesday January 8
Joint books: ABN Amro, UBS Warburg
ABN Amro - LBBW issued two successful dollar bonds last year and for this, its first benchmark of 2003, they held sales presentations in the UK this week.
We started marketing the transaction in the mid-50s over the five year Treasury, which was in line with secondary spreads and around 20bp back of the new Fannie Mae five year.
The backdrop of the dollar market is positive with a lot of cash available to go into the market coupled with high redemptions in January and investors still buying spread product.
Demand was initially seen from Asia and subsequent buying came from clients in the UK, Benelux, Germany, Ireland and Switzerland.
The issue has maintained its re-offer spread and we have already seen retail follow through in the secondary market.
There are some concerns from investors about German banks but LBBW is one of the strongest of the German landesbanks. Its debt is grandfathered until 2016 and it also has a strong financial rating of B-, which is the highest of the landesbanks.
UBS Warburg - After a period of premarketing and bookbuilding, the transaction was launched and priced simultaneously on Wednesday afternoon at 55bp over the five year Treasury, which equated to around 11bp over mid-swaps. The deal was sized to demand.
The composition of accounts was of a high quality, consisting entirely of end investors. Distribution was into Asia, Germany, Switzerland, Benelux and the UK and was satisfyingly broad.
It must be stressed that this was not an opportunistic outing by the issuer. It was a purposefully bookbuilt transaction, leveraging off the strong name that LBBW has throughout Europe and Asia.
Since pricing, follow through buying has been supportive with Switzerland starting to eat away at the small residual position that we carried into pricing.
As the market traded lower and swap spreads have widened, the issue has made a modest outperformance, now being quoted at 10bp over swaps.
The pricing of the new issue was consistent with where LBBW trades in euros and in dollars at the same maturity whilst being able to pick up a small liquidity premium for the current coupon bond.