* Santander International Ltd
Guarantor: Banco de Santander SA de Crédito
Amount: Dfl 400m (euro-fungible with Ffr2bn issue launched 15/01/98)
Maturity: February 12, 2008
Issue price: 100.959
Fixed re-offer price: 99.334
Spread at re-offer: 37bp over the interpolated 8.25% September 2007 and 5.25% July 2008 DSLs
Lead mgr: ABN AMRO Hoare Govett
This has been a very good issue and we sold almost all the paper on the first day. Two months ago it would have been difficult to launch this transaction, but the direction of the guilder market is changing.
Most of the new deals are being prepared over a period of time and we are seeing new credits such as Santander and 3CIF.
It is important to put a lot of work into deals, getting borrowers to talk to leading investors, finding credits that have a good story that people can understand, and choosing a spread that is considered as reasonable.
This is the first time that a Spanish name has launched a public deal in guilders and very few institutional investors, especially the smaller ones, have any exposure to Spain. This deal offers those investors the chance to diversify their portfolios.
If you look at Santander's balance sheet they are very strong financially. Were they a Dutch bank, rather than a Spanish one, they would probably be rated
at least one notch higher as their rating has been restrained by the sovereign ceiling for Spanish credits.
One thing that we had to make sure of before launching the deal was to explain Santander's exposure to Latin America before launching the deal. Investors didn't have doubts about their investments there and in fact some saw it as a prosperous venture and a positive point.
The spread has been one of the main attractions for Dutch investors. There has been little guilder supply and many Dutch institutions have been buying Deutschmark products, including Pfandbriefe, but once you show them a good spread over those products they will come into a deal.
"...Santander is a pretty exciting name for the guilder market. Most issues are for rock solid Dutch borrowers or German financials. For diversification purposes investors are always happy to see a new name to put in their books.
The spread is fair, not really cheap, not really expensive and on the whole this is a decent deal. We would have preferred a larger, more liquid deal, but they probably wanted to be a bit conservative on size with their first foray into the guilder market."
"...the spread is not bad but we don't know if there is much demand in Holland for the name. Institutional investors are not familiar with Santander so ABN will have had to work hard on this to place it all.
However, it looks like Dutch investors are going to have to get used to buying new names as recently we have seen a few other debuts -- Chase, 3CIF and Halifax."
"...we've sold our allotment as the spread is attractive for the rating. People were expecting it so there weren't too many problems with it being a debut.
We see continuing interest in the long end of the curve, and although there is still some Halifax issue around, there was room for this in the market."
* Dutch finance ministry set to reopen 5.25% July 2008 DSL
Traders expect the Dutch ministry of finance to reopen the 5.25% July 2008 DSL when it announces the next Dutch State Loan auction today (Friday). The bonds will be auctioned from Tuesday.
When the new 10 year benchmark issue was launched on January 13 only Dfl 8bn of paper was sold. As the ministry of finance has said that it wants to have benchmarks larger than this, a reopening would fit in with its plans.
Investors would welcome additional 10 year paper following two years of limited supply. Traders expect the new bonds to be priced favourably and this anticipation led to the outstanding paper coming under pressure this week.
Should the ministry decide to auction a new DSL, traders say that a 15 year or 30 year transaction would be well received, as would a reopening of the 7.5% January 2023 DSL.
Investors are concentrating on the long end of the guilder yield curve and such an issue would allow the state to lock in the current low yields.
However, the ministry of finance has said it is keen on reducing the average duration of the state's debt, which is longer than that of other EU countries.