* Landesbank Baden-Württemberg Rating: Aaa/AAA/AAA
Amount: Sfr200m
Maturity: June 27, 2005
Issue price: 100.18
Coupon: 3.25%
Launched: Tuesday May 29
Lead mgr: ABN Amro
Bookrunner's comment:
This has been going extremely well. We had a strong lead order book ahead of launch, having prepared the trade for some time, and we have also had good demand from the syndicate. This enabled us to place all the paper on the day of launch.
The deal was priced at Libid minus 3bp to co-leads and today (Wednesday) it is trading at minus 7bp. We saw a mix of institutions and asset managers, who supported the trade strongly.
Landesbank Baden-Württemberg is a superb credit and whatever the problems of the Landesbank sector, the borrower will definitely withstand any turbulence.
Market appraisal:
"...this is going OK. Optically, it is not cheap, but the pricing is fair at 7bp through mid-swaps. We have seen good flows, predominantly from institutions, and found buyers.
Those who say they are overloaded with Landesbanks are probably not telling the truth. We have seen some large redemptions of Landesbank paper recently and also there has been relatively little Landesbank supply in the past three or four years compared to the early 1990s. People must therefore have room for these credits in their portfolios.
Overall, the market is looking brighter after the long holiday weekend, with volumes picking up nicely."
"...everyone knows how to price a German Landesbank and this wasn't too wrong at around Libid minus 3bp to co-leads. It would probably have been better a couple of basis points wider, but it should be soaked up by retail over the coming weeks and we didn't have a problem with the level. Also, Landesbank Baden-Württemberg is one of the better Landesbanks in terms of name recognition, because it has not come to the market too often - unlike some. That is probably worth a little in the pricing.
It was right to choose a maturity shorter than five years, both to attract retail investors and, more importantly, to avoid the five year sector. There has been a lot of supply there recently, with deals such as Philip Morris, and it was beginning to look crowded."
"...nothing to get excited about. It was rather expensive, but seems to have worked - a couple of the syndicate members took pretty big tickets. We only had a small ticket and have not sold anything yet."
* Pfandbriefstelle der Oesterreichischen Landes- und Hypothekenbank
Rating: Aaa
Amount: Sfr300m
Maturity: June 27, 2003
Issue price: 100.04
Coupon: Three month Libor flat
Launched: Thursday May 31
Sole mgr: Credit Suisse First Boston
Bookrunner's comment:
We had some decent lead orders lined up, pretty big ones, and have as a result sold most of the paper. We still have a position left, but we are confident this will go in the next few days.
The takers are some money market funds and institutions that either have a natural need for this type of product, or which are looking for something short dated to reduce the
duration of their portfolio. There will always be demand from these accounts for triple-A paper paying Libor flat that is repo eligible and listed on the Swiss exchange. It is very hard to find such paper elsewhere.
Quality-wise, buying Pfandbriefstelle is like buying Austria itself, and you can be doubly secure with the credit in such a short maturity.
Domestic issuance:
* Kanton of Basle City
Amount: Sfr300n
Maturity: June 25, 2008
Issue price: 100.00
Coupon: 3.375%
Launched: Wednesday May 30
Joint leads: UBS Warburg (books), Kantonalbank of Basle City
Bookrunner's comment:
This has been going very well, given the fact that there was a bidding process for the mandate. Deals are never blowouts in such cases, but since there has not been a deal for a German-speaking canton in the market for some time this had some scarcity value.
We did not know how well the issue would work, but it clearly appealed to investors, despite the punchy pricing, as a surprisingly large number of institutions participated and we have sold most of the paper. The pricing was 19bp over Confederation bonds, or 13bp through mid-swaps.