Amount: Eu1bn Öffentlicher Pfandbrief series 573
Maturity: January 15, 2018
Issue price: 97.548
Fixed re-offer price: 97.548
Coupon: 4.5%
Spread at re-offer: 25bp over the 6% June 2016 Bund; mid-swaps plus 7bp
Launched: Friday January 17
Joint leads: Dresdner Kleinwort Wasserstein, SG
Borrower's comment:
We were approached by several banks about doing a 15 year issues. Insurance companies and funds especially like the idea of longer dated paper and the last 15 year issue we had launched was now nearly a 10 year.
This transaction offers a pick-up of about 10bp over the recent 15 year Republic of Austria deal.
We would be interested in going longer - if there were demand we would consider a 30 year transaction.
Bookrunners' comments:
DrKW - We had recently seen a successful 15 year deal for the Republic of Austria and a 15 year issue had been a longstanding idea for Depfa since the middle of last year. There is also a general demand for longer dated paper, especially from prime names.
The transaction attracted all types of investors, but we sold most of our paper into Germany and Austria, as we would have expected, and the rest into the typical retail network of the Benelux, France, the Netherlands and a little bit to Ireland.
SG - This was a wonderful deal and we had no problems selling the paper or explaining the credit to investors.
Moreover, there was no paper outstanding in the 15 year area of the curve and the issue was fairly priced. The issue is trading at 7bp over, which is a stable and decent level.
We had strong demand from accounts in Scandinavia, the Netherlands and France and a surprising ticket from Asia, plus some small demand from the Benelux.
The book was of a good quality and included a decent amount of fresh money, with some swaps from the new Austria issue and the Depfa 2014.
Market appraisal:
"...this was a great deal, which was enacted without any market making. There was an agreement between the leads and co-managers that we would guarantee a spread of 10bp.
From the deal with Austria, we knew what clients wanted. The bond is now trading at a stable level at 8bp over."
"... this is one of the best credits in the Pfandbrief market and 7bp over at re-offer is fine. This issue was not expected to be a blow out, but it will sell in the next two to three weeks and 80% of the paper is already placed. The longer dated bonds are particularly liked by insurance companies."
"... Depfa was too tight at the re-offer level but cleared around the all-in. We sold our bonds mainly into Benelux to pension funds and asset managers.
There is nothing of this credit class in this maturity outstanding and the issue appealed to buyers of longer dated paper who wanted a liquid triple-A name with a spread over swaps."
