In late November, Electrolux (Baa1/BBB+) raised Eu300m in a 6.125% December 2005 issue via Lehman Brothers and Schroder Salomon Smith Barney. The transaction, lower than the Eu500m targeted, was priced at the wide end of price talk, at 80bp over mid-swaps.
A week later, Securitas (Baa1/BBB+) launched a 6.125% January 2006 issue after having been forced to opt for a five rather than a seven year transaction, cut the size of its deal from Eu500m, and price it at the wide end of the indicated 90bp-95bp over mid-swaps range. BNP Paribas and Deutsche Bank were leads for Securitas.
One banker involved in the last Securitas transaction said that the pricing differential between the two borrowers could be explained by the positive Standard & Poor's outlook for Electrolux and the white goods manufacturer's higher name recognition.
This morning (Monday), the Securitas five year paper was trading at 94bp/89bp over mid-swaps and the Electrolux at 90bp/80bp over.
Unlike Securitas, Electrolux will not roadshow before its transaction. The company visited investors ahead of its November issue, and Bjorn Uhlin, head of Nordic corporates at ABN Amro, told EuroWeek that an update on the Electrolux credit should prove sufficient.
"Given the strong demand for non-auto, non-telco paper we are seeing, there is a very strong likelihood of Electrolux getting a successful deal done without the need for a roadshow," he said.
Uhlin said that along with investor appetite, Electrolux hopes to take advantage of the lower yields available than in November and the opportunity to launch a longer dated transaction.
The two Swedish corporates will have been encouraged by the success of Birka Energi (Baa1/BBB+) in selling Eu500m of seven year paper at the beginning of February. ABN Amro and Schroder Salomon Smith Barney priced that issue at 94bp over mid-swaps - inside price talk of 95bp-98bp over. Birka, too, had previously been a victim of the difficult end of year market, postponing a planned three year floating rate note.