South African rand

  • 24 Jul 1998
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* Commerzbank AG

Amount: R100m

Maturity: July 31, 2001

Issue price: 99.775

Fixed re-offer price: 98.65

Coupon: 16.5%

Launched: Friday July 17

Lead mgr: TD Securities

* European Bank for Reconstruction & Development

Rating: Aaa/AAA

Amount: R2bn (fungible with two issues totalling R3.2bn launched 02/12/97 and 06/07/98)

Maturity: December 31, 2018

Issue price: 5.30

Coupon: zero

Launched: Monday July 20

Sole mgr: TD Securities

* World Bank

Rating: Aaa/AAA

Amount: R200m

Maturity: August 14, 2001

Issue price: 99.22

Coupon: 16%

Launched: Tuesday July 21

Lead mgr: RBC DS

Market round-up:

Concern over the currency crisis, its effect on the economic growth of the South Africa, and rumours that the country's credit rating could be downgraded, resulted in continued volatility in the domestic market in South Africa this week.

On a brighter note, however, the market reacted positively to comments from finance minister Trevor Manuel in a parliamentary debate regarding the economy, the strength of the currency and the independence of the Reserve Bank.

Following the speech, the rand firmed against the dollar from R6.35/$ before the debate to R6.26/$, producing a rally in the market. The R150 benchmark strengthened to yield 16% on Thursday morning. Although it softened over the afternoon to 16.20%, the overall trend was positive.

Although affected by this instability, the Eurorand market rallied on Wednesday and Thursday, to the benefit of the three issues launched this week.

"The domestic market is still jumping around but trading and placement has continued to improve the Eurorand market since last month. This indicates a more positive feeling in the international market regarding South Africa," said a syndicate official in London.

In response to continuing demand for zero coupon bonds TD Securities reopened its existing R3.2bn issue (increased earlier in the month from R2bn) for the EBRD due December 2018 with a R2bn block trade on Monday.

The new tranche, launched on the strength of strong lead orders primarily from institutional investors in Italy and Germany, brought the total volume of the issue to R5.2bn.

"This is very quickly developing into a benchmark issue with an increasingly high level of liquidity," said an official at TD Securities.

The new tranche was launched at the bottom of the market at an issue price of 5.30 and was trading well by Thursday following a rally in the market of 50bp.

To cater for the appetite for coupon paper, two three year issues were also launched during the week targeted at retail investors that were also taken up by institutional accounts.

The World Bank came to the market on Tuesday with a R200m 16% issue via bookrunner RBC DS. Launched at an issue price of 99.20 the issue was trading at 97.95/98.05 on Thursday, representing a tightening of 10 cents compared to the co-managers' in-price.

The lead manager reported an increase in demand for paper despite a slowdown in sales to retail investors due to the holiday season.

According to a spokesperson at RBC DS: "We have seen good reinvestment flows from a R1bn one year issue maturing this week. To avoid taking a currency loss on their investment many holders of these bonds are looking to buy into three and five years as well as shorter dated paper."

In contrast to the plethora of new issues for supranational names seen over the past few weeks, on Friday, TD Securities brought a three year transaction for Commerzbank.

The Aa2(Moody's)/ AA-(S&P) rated borrower came to the market with an issue priced at 99.775.

Brought before the rally in the market the issue was well priced and offered a 16.50% coupon giving a pick-up of 40bp over the recent LBSH 16% issue due August 2001.

"Quite cheap pricing and the market has gone up since launch -- we have placed a few good sized tickets already with some small and medium sized funds," said a syndicate member.

Although no one denied the appeal of the high coupon levels attainable under current market conditions, the instability in the sector had lead to a drop in demand from retail investors and a number of managers were unwilling to hold positions in the currency.

"The market is oversupplied at the moment and retail investors are still not coming back to it in large numbers. Many of them fear that the downward risk outweighs the upward risk in the Eurorand sector," said one banker. *

  • 24 Jul 1998

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 417,651.57 1605 9.04%
2 JPMorgan 380,255.75 1735 8.23%
3 Bank of America Merrill Lynch 360,270.83 1308 7.80%
4 Goldman Sachs 268,034.61 924 5.80%
5 Barclays 267,242.43 1081 5.79%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 45,449.36 196 6.57%
2 BNP Paribas 38,734.80 217 5.60%
3 Deutsche Bank 37,615.10 139 5.44%
4 JPMorgan 34,724.19 118 5.02%
5 Bank of America Merrill Lynch 33,835.53 112 4.89%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 22,475.00 105 8.66%
2 Morgan Stanley 19,057.00 101 7.34%
3 Citi 17,812.08 111 6.86%
4 UBS 17,693.89 71 6.82%
5 Goldman Sachs 17,332.64 99 6.68%