“The private placement market is very appealing for Belgian regions and municipalities,” said a global head of medium term notes. “The borrowers have seen the positive reception for French regions. A few Belgian regions and cities have entered the market and others are beginning to follow. The market will be stronger and deeper this year. We are expecting quite a few cities to debut.”
Last year, 27 French local authority issuers printed notes in the private placement market and seven of these were debuts. The borrowers have found strong demand, but have limited funding needs leaving room for Belgian regions to tap the interest.
Communauté Française de Belgique kicked off its 2014 funding by selling its private placement of the year on Tuesday. It printed a €30m June 2023 note through Royal Bank of Scotland. Priced at par, it carries a coupon of 2.17%.
The region’s deal follows a rare appearance by Province Flemish Brabant, which printed on April 11. The note was the Province’s second private placement — a €7m five year note through ING. Priced at par, it carries a coupon of 1.566%.
“Investors are keen to diversify,” said an MTN banker. “But a lot of them require a safe bet. These rare regions are the perfect name for them. Given the increased demand, the borrowers can get a good deal and more regions will print private placements.”
Belgian cities and municipalities are looking closely at the market.
“Cities are having trouble getting bank financing,” said a head of debt capital markets. “They also desire duration so the capital markets look very appealing.”
But some of the cities and municipalities will take a while to appear in the market as they do not have a government guarantee and will require a bit of marketing, according to dealers.
“Several cities in Belgium don’t have a guarantee — explicit or implicit — from the region,” said a global head of MTNs. “They require a lot of credit work, but demand is there, it just takes some time.”
One municipality, Ville de Liege, debuted in the private placement market with six small clips with maturities ranging from five to 30 years on January 31.
After the issuer sold its debut notes it began to receive reverse enquiries and it decided to print an additional €25m 15 year note later that day.
