Guarantor: Bayerische Motoren Werke AG
Maturity: December 6, 2007
Issue/re-offer price: 99.972
Spread at re-offer: 52bp over the 7.25% December 2007 Gilt
Launched: Tuesday June 8
Joint books: Dresdner Kleinwort Wasserstein, Royal Bank of Scotland
Dresdner ? The transaction was sized at £150m as this was the amount the company needed. BMW had been looking at bringing the deal for some time and decided to issue through the Japanese entity.
The bonds were priced at 52bp over Gilts which is equivalent to 10bp over mid-swaps, in line with the borrower?s curve.
This was a bond targeted at retail investors and we saw interest from Swiss and continental investors as well as those in the UK.
There were also institutional investors looking to gain exposure at the short end of the curve.
As you would expect with a retail targeted deal, it was not fully subscribed by the time of pricing but there has been continued interest today (Wednesday) from Swiss accounts and we would expect the bonds to sell down well before the payment date of June 30.
RBS ? BMW issued a 2006 transaction at the beginning of October last year, which was a great success. The borrower tapped it in January this year bringing the total size to £350m.
This was a slightly different transaction as £150m was all the Japanese finance entity needed, ruling out a lot of institutional accounts.
It is a great retail name and yields in the UK compared to Europe make the 5.75% coupon attractive.
We went out with price guidance of Gilts plus 52bp area ? the 2006s were trading at 46bp/47bp over. The 2009s were at 60bp/61bp over so the price guidance of 52bp area is spot-on the issuer?s curve.
There were a number of key institutional investors, which meant a large percentage of the transaction was subscribed at the time of pricing and the rest will sell down to retail accounts.
The pricing of the bonds equates to mid-swaps plus 10bp, in line with euros and offered the borrower an attractive funding level.
?...at £150m it was too small for many UK institutional investors and too tight at 10bp or 11bp over Libor.
BMW trades at 16bp over Libor in euros and although the pricing is in line with outstanding sterling paper, it is illiquid. The 2009s were for £100m and so are not a good comparable.
The paper was bid 1bp wider on Wednesday.?