Rating: A1/A-/AA-
Amount: $750m tier one capital
Maturity: perpetual
Issue/re-offer price: 100.00
Coupon: 6.8%
Call option: at par from 31/03/08
Launched: Tuesday November 26
Joint books: Goldman Sachs, Merrill Lynch, RBS, UBS Warburg
Bookrunners' comments:
Goldman - In a word, the deal was great. We have been involved in two similar deals, but the major difference this time was the competition in supply. And so to get such quick momentum on the deal was very gratifying.
We announced the deal on Wednesday and by the end of play on Thursday we had close to $1bn in the book.
At 6.8%, it was one of the best coupons we have seen in this market. We did a deal for Lloyds at 6.9% and it was a fantastic achievement to get inside that. It was a great deal to work on.
The Asian retail market is a rapidly developing market, but to get deals placed you need a name that is recognisable, a nice headline coupon and a good rating. But the rating can be far outweighed by strong name recognition and that is what RBS has.
Aside from the involvement in Asia, we got good participation out of Europe, and close to 25% of demand came from there. Demand for the deal could have supported a larger size, but $750m was the upper limit that the issuer was comfortable with and that is where the cut off came.
Merrill - Time and time again RBS has proven itself as a truly opportunistic issuer in the best sense of the word, taking advantage of exceptional market conditions. At 6.8%, RBS has achieved its lowest ever coupon on a dollar preferred security, driving a $750m issue with an order book that was twice oversubscribed.
The transaction represents RBS's debut offering in the Asian market, after having historically had a significant presence in the US retail market.
RBS worked with us for 10 days as a structuring adviser, appointed lead managers on Wednesday morning, announced the transaction on Thursday morning in Asia, and by Friday evening we were refining size up from $500m and tightening price from an initial guidance of 7%.
The issuer cut a swathe through the noise of other announced and rumoured capital transactions, reflecting the appeal of the credit and the increasing maturity and liquidity of this market.
The deal was placed within our own private client network and to local asset managers, who are buying for their private clients.
RBS has strong name recognition in Asia, heightened by a non-deal roadshow in October, and it generated core interest from Singapore and Hong Kong investors. Approximately 85% was placed into the region.
The achievement of the RBS transaction can be appraised in the context of the very successful Lloyds 6.9% issue that was placed recently. RBS's 6.8% coupon was achieved despite a two notch rating differential versus the Lloyds transaction and with 30 year Treasuries yielding 5.02% as opposed to 4.69%.
RBS - We took the funding guys out to Asia on a short schedule of meetings about a month ago and the deal went tremendously well.
The private banks out there were the largest drivers of the deal and on the visit it was obvious that the demand was there, so RBS decided to go ahead with the transaction.
We went out there with a wide of 7%, but the book was oversubscribed by 100% and we managed to close the deal a little tighter. But there were no plans to do a larger deal.
We were delighted with the transaction. We managed to fill a quality investor book and RBS got what they required at a very good level.
UBS - This was a fantastic deal that we have worked on for a long time. We were involved in the Standard Chartered deal, which we were mandated on four or five weeks ago, and through that we realised that the investor community out there wanted to put their money in similar instruments to Standard Chartered. We scouted around and RBS was an obvious candidate.
During the last seven days there have been rumours about other issuers doing similar types of deals, such as Allianz, and although we thought the deal would be achievable at a coupon of 6.8%, we went out with a target of 7% to drum up interest during a time of extra supply. But the book was built very quickly and we were quite easily able to bring price talks back down to 6.8%.
The order book grew to $1.4bn and we scaled back the book according to the quality of investors. The original intention was to do a $500m deal. The issuer did not need the capital and, although the deal could have been bigger, we capped the trade at $750m.
