Samurais - Citigroup and Poland make a splash

  • 16 Jan 2004
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The flow of issuance in the Samurai bond market continued to dwindle in 2003. Investors were put off by lingering credit concerns in the aftermath of the crises in Argentina and Turkey and the meagre coupons on offer for even low rated credits.

The situation is unlikely to improve — Latin American borrowers, historically the backbone of the Samurai market, are effectively barred from issuing for the time being.

The market was still receptive for the right names, but only Citigroup made a splash in terms of size. Otherwise, the market was mostly confined to deals from eastern Europe and South Korea until carmakers Volkswagen, Renault and GMAC tapped the market in November.

Citigroup’s ¥165bn bond, launched in June by Nikko Citigroup, offered investors five tranches with maturities from five to 20 years and coupons from 0.49% to 1.46%. The ¥110bn five year tranche paid a coupon of 0.49% and a spread of 25bp over Libor.

As the pricing was in line with that offered by lesser rated Japanese banks, relative value investors found the deal appealing.

But the enthusiastic reception for Volkswagen’s five year Samurai in November suggested the appetite for credit was reviving. At ¥50bn, the deal was the largest single tranche yen corporate bond since GE Capital’s multi-tranche deal in June 2002.

Moody’s put Volkswagen’s A1 rating on review for possible downgrade just as Mitsubishi Securities and Daiwa Securities SMBC were marketing the bond.

The rating action had little impact, however. “While some accounts withdrew and a slight price widening was suggested, orders continued to increase,” says Sam Amalou, executive director of debt origination at Daiwa SMBC in London. “We contacted all the investors to confirm orders and most of them renewed their interest.”

The success of the deal was confirmed by its pricing at the tight end of the 35bp-40bp over Libor guidance — flat to or tighter than where VW’s secondary euro paper trades on an asset swap basis.

Just as compelling a demonstration of the cost effectiveness of the Samurai market was the Republic of Poland’s debut Samurai bond in June, which came flat to the sovereign’s euro curve.

Daiwa and Mizuho Securities priced the ¥25bn seven year transaction at 40bp over Libor, with the lowest ever coupon on a debut sovereign Samurai, at 0.84%.

“There was understandably huge interest in this deal and the result is clear proof that the Samurai market is cost competitive and an attractive alternative source of funding for key borrowers,” says Vince Purton, managing director of debt origination at Daiwa.

“Poland quite rightly focused on investor diversification and price, and the market delivered on both counts. It was an exceptional result for a debut deal and bodes well for future issues.” 

  • 16 Jan 2004

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 344,234.82 1335 8.11%
2 JPMorgan 339,975.37 1458 8.01%
3 Bank of America Merrill Lynch 303,833.99 1046 7.15%
4 Barclays 256,068.68 961 6.03%
5 Goldman Sachs 226,910.60 765 5.34%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 46,845.71 193 6.55%
2 JPMorgan 45,135.56 102 6.32%
3 UniCredit 39,106.98 168 5.47%
4 Credit Agricole CIB 36,468.56 180 5.10%
5 SG Corporate & Investment Banking 35,682.25 138 4.99%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 14,088.48 62 8.97%
2 Goldman Sachs 13,469.15 66 8.58%
3 Citi 9,948.21 58 6.34%
4 Morgan Stanley 8,572.10 54 5.46%
5 UBS 8,391.04 36 5.34%