Sterling

  • 13 Mar 1998
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* Canada

Rating: Aa2/AA+

Amount: £300m

Maturity: November 26, 2004

Issue/fixed re-offer price: 99.54

Coupon: 6.25%

Spread at re-offer: 20bp over the 6.75% November 2004 Gilt

Launched: Thursday March 12

Lead mgr: SBC Warburg Dillon Read

Borrower's comment:

We chose a sterling issue because it was attractive to us from a cost of funds perspective. It had the additional benefit of broadening our investor base and is consistent with the further development of our Euro-MTN programme.

We sized it conservatively to ensure a positive reception. We are interested in borrowing in markets away from the US dollar market on an occasional basis.

That is a developing activity for us and we want to ensure that we have a constructive relationship with investors. The response indicated to us that the deal could have been sized somewhat more generously.

The bulk of the bonds were placed in the UK and in Switzerland which was consistent with our expectations. But we were surprised by the depth of demand rather than the breadth of it.

In retrospect, I think that was to do with the fact that we are one of the few sovereigns to come to the sterling market -- and possibly something to do with our infrequency as a borrower in the market place.

We have done small public issues outside the US dollar market in the past: in New Zealand dollars and in Danish kroner at the end of last year. We are interested in broadening the range of sources of funds and not relying on the US dollar market for foreign exchange reserve funding, which is what we do these borrowings for.

We are quite comfortable with our funding although there is a possibility that we will tap the markets again as the year progresses.

Bookrunner's comment:

This is Canada's first sterling transaction and probably the most successful Eurosterling deal we have been associated with.

Although the 2004 sector has seen some retail targeted issuance and small taps, there has been no quality liquid issuance for some time. In the longer dates in sterling, there has been very little sovereign issuance.

The November 2004 maturity is designed to match the 2004 Gilt. The spread of 20bp over was deemed appropriate relative to the trading level of illiquid secondary issues.

The issue was marketed to clients early on Thursday and the order book built up extremely quickly, particularly from UK and Swiss institutions.

By 9.30am we had an order book of £430m with an allotment of £240m. As a result the allocation process was extremely difficult. The final geographical split was UK 38%, Switzerland 42%, central banks 10%, Asia 5% and rest of Europe 5%.

The deal broke at 18bp and traded quickly into 16bp over before settling at 17bp/16.5bp.

Market appraisal:

"...a fantastic transaction and a great debut for Canada in sterling. We were also looking at the trade at exactly the same level so we were always confident that the issue would succeed at that spread.

The bulk of our placement was overseas. We saw very good demand from Switzerland and some UK IMGs have looked at it.

The deal will tighten even further than the 17bp over it reached after breaking syndicate as retail continue to take it down.

There are very few liquid sovereign deals in the sterling market. This one will be put on all the major buylists and it will tighten in to the low teens in the coming weeks."

"...a tremendous deal which sold out instantly. Our sales people were scrambling to get bonds.

The extreme rarity of a pure sovereign credit in sterling and a rare venture into a foreign currency for Canada got everyone excited.

We had demand from the UK, from Switzerland and the Middle East. We would have liked a more substantial ticket."

"...this deal has extreme rarity value in that Canada is the first high quality sovereign to issue in sterling since New Zealand did a three year last February -- so all manner of investors were keen to participate in the deal.

In addition there is a strong retail bid for six and seven year sterling paper and no liquid deals have been issued in that maturity for some time.

Finally, Canada is a really popular name and the issue was well priced at 20bp over. All these points contributed to a blow out deal and a rapid tightening in spread to 16bp over the Gilt."

High yield debt:

* NTL Inc

Rating: B3/B-

Tranche 1: £300m deep discount tranche

Maturity: April 1, 2008

Issue price: 58.62

Coupon: 10.75%

Call option: at 105. 375% from 01/04/2003, declining by 1.792% annually

Spread at re-offer: 475bp over the 7.25% 07/12/2007 Gilt

Tranche 2: £125m

Maturity: April 1, 2008

Issue price: 99.67

Coupon: 9.50%

Call option: at 104.75% from 01/04/2003 declining by 1.583% annually

Spread at re-offer: 350bp over the 7.25% 2007 Gilt

Launched: Friday March 6

Joint books: DLJ, Morgan Stanley

Asset backed securities:

* Punch Taverns

Class A1 notes: £120m

Rating: A2/A

Maturity: April 15, 2008

Issue/fixed re-offer price: 100.00

Coupon: three month Libor plus 60bp

Call option: from 26/03/98 to 26/03/2001 at par for first 40% and at 101% for balance. Thereafter callable at par

Class A2 notes: £60m

Rating: A2/A

Maturity: April 15, 2011

Issue/fixed re-offer price: 100.00

Coupon: three month Libor plus 75bp until 26/03/2008, thereafter three month Libor plus 2%

Call option: from 26/03/98 to 26/03/2001 at par for first 40% and at 101% for balance. Thereafter callable at par

Class A3 notes: £80m

Rating: A2/A

Maturity: April 15, 2015

Issue/fixed re-offer price: 100.00

Coupon: three month Libor plus 95bp until 26/03/2010, thereafter three month Libor plus 2%

Call option: at par from 26/03/2003

Class A4 notes: £175m

Rating: A2/.A

Maturity: April 15, 2022

Issue/fixed re-offer price: 100.00

Coupon: 7.274% quarterly

Spread at re-offer: 135bp over the 2017 Gilt

Class B notes: £100m

Rating: Baa2/BBB

Maturity: April 15, 2026

Issue/fixed re-offer price: 100.00

Coupon: 7.567% quarterly

Spread at re-offer: 170bp over the 2021 Gilt

Launched: Thursday March 12

Lead mgr: BT Alex Brown International

Secured on: Beer revenues and rental incomes from a portfolio of UK public houses

Eurosterling secondary market

Compiled by HSBC Markets, London. Tel: +44 171-488 1733.

The secondary market was decidedly muted, although the passing of the resolutions to buy back both outstanding BAT Eurosterling issues provided an impetus for the long end which saw a good deal of buying interest.

The BAT 8-1/2% 2005 was priced at 112.154 for value Wednesday, March 18, while the 9-1/4% of 2020 was priced at 133.289 for value on March 17.

The Prudential 6-7/8% of 2023 saw good demand to end the week 4bp tighter at +68.5bp. The 3i 6-7/8% of 2023 ended 3bp tighter at +78.5bp and the Northumbria Water 6-7/8% of 2023 ended the week steady at +87bp.

The new securitised fixed rate Punch transaction was well received with the £175m 7.274% of 2022 tranche at plus 135bp to the 8-3/4% 2017 Gilt and the £100m 7.567% 2026 'B' tranche at plus 175bp to the 8% of 2021 Gilt.

At the short end, the new £300m Canada 6-1/4% 2004 (AA+/Aa2) at +20bp to the 6-3/4% 2004 Gilt met from strong demand especially overseas, with name rarity value evident producing a first day tightening of 3.5bp.

Elsewhere, secondary activity was slight with recent issues such as Coca-Cola Enterprises 6-3/4% of 2008 steady at +61bp and Southern Water 6.842% of 2008 steady at +71bp.

Other 10 year deals such as the ICI 7-5/8% of 2007 tightened 2bp to +77.5bp, while the Commerzbank 7-7/8% of 2007 and the Dresdner 7-3/4% of 2007 remained at +81bp and +71bp respectively.

  • 13 Mar 1998

All International Bonds

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 JPMorgan 92.59 388 8.96%
2 Citi 85.30 278 8.25%
3 BofA Securities 63.15 265 6.11%
4 Barclays 58.01 223 5.61%
5 Deutsche Bank 55.74 184 5.39%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 60.87 123 14.06%
2 Credit Agricole CIB 28.59 93 6.60%
3 Santander 25.41 90 5.87%
4 JPMorgan 23.88 61 5.52%
5 UniCredit 21.51 103 4.97%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 Goldman Sachs 2.07 11 10.42%
2 BofA Securities 1.40 6 7.01%
3 Citi 1.37 7 6.87%
4 Morgan Stanley 1.36 6 6.85%
5 JPMorgan 1.31 7 6.59%