Amount: $500m
Maturity: August 2, 2012
Issue/re-offer price: 99.754
Coupon: 5.125%
Spread at re-offer: 51bp over the 4.785% May 2007 UST
Launched: Friday July 14
Joint books: JP Morgan, UBS Warburg
Bookrunners' comments:
JP Morgan - Eurofima has a very strong retail following and demand for 10 year dollar product is quite strong at the moment with very little paper around in that maturity. And, given that the deal was fairly priced, it was a great success. Distribution was mixed between Europe, offshore US and Asia.
Ten years is generally a bit long for retail investors, but Eurofima has a strong retail following and the market situation is pushing investors to go for some duration.
The pricing at 51bp over Treasuries compares favourably with recent issues in the 10 year sector, such as Austria, BNG and Council of Europe, which are all trading tighter. Swap spreads have been very volatile and Eurofima has widened to 52bp-54bp with swap spreads wider by at least 5bp. In the circumstances, this issue has performed very well.
UBS Warburg - The issuer was looking at several funding opportunities in the 10 year area and we were one of the banks that approached them with the idea of issuing 10 year dollars. There are very few outstanding bonds in the 10 year Eurodollar sector and those that do exist are trading at very tight levels. For example, the Council of Europe trades at 37bp/35bp over Treasuries, Austria at 32bp/30bp and BNG at 52bp/50bp.
Eurofima is a rare name generally and even more so in the dollar market. In fact this will be its only outstanding dollar bond.
Because the 10 year sector is notoriously undersupplied, we did ask the borrower for some time to sound the concept out with a few investors. When that proved successful, we quickly moved ahead with the transaction, launching and pricing it on Friday morning at plus 51bp.
Sales were made to the usual Eurodollar buyers, with the geographical mix being well balanced between Asia, the UK, Switzerland and offshore US. Institutional investors dominated the book, but there was a little retail demand because coupons of 5% in dollars are hard to find.
We were very pleased with the transaction and feel it is the right sort of product to launch in volatile market conditions.
On Friday and Monday, the deal traded re-offer bid, but it has widened in line with the market, this morning (Wednesday), bid at around 53bp and offered at 51bp.
