NatWest Markets
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The total issuance of investment grade corporate bonds in February was an underwhelming €14.8bn but the property sector has outshone all others in 2018 and this week was no different as investors had further diversification to consider. -
Six of the nine investment grade corporate new issues in the last week of February were announced with a three letter acronym that, while providing clarity, served to frustrate investors keen to see greater volumes of issuance. WNG stands for “will not grow” and this week told investors that the meagre sized deals would not be increased, irrespective of demand.
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Finnish residential property developer Kojamo and French care home operator Orpea added to the geographical diversity of the property company corporate bonds sold this week with a €500m seven year deal, while frequent issuer RCI Banque sold a dual tranche offering
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French commercial property company Carmila returned to the investment grade bond market after two years away and received a positive response from investors for its longest maturity to date.
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Five new investment grade corporate bond deals were priced on Tuesday and, while pricing was competitive, none of the issuers allowed for any growth in the size of the deals as all five used a no-grow strategy.
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Royal Bank of Scotland was in the market selling €4.75bn of debt across three tranches from its holding company and operating company on Tuesday, putting a large dent in its recently updated funding targets.
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Assystem Technologies, a French engineering specialist owned by Ardian, is launching an add-on to its term loans to fund its purchase of German peer SQS Software Quality Systems, as merger and acquisition deals gain share in the leveraged loan market.
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With the return of stability to the euro public sector market, a new wave of borrowing hit this week. Four core European names brought syndications, some of which were able to access unusual or difficult tenors because of the higher rates on offer.
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French property companies were in vogue this week as Icade sold its fourth corporate bond in two years, further extending its redemption profile, while Mercialys, the firm spun off from supermarkets group Casino, saw its sub-benchmark deal 2.5 times oversubscribed.
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The public sector bond market in euros is in rude health thanks to the return of stability at higher yields. Two borrowers took advantage of the conditions to pull off smooth executions with skinny new issue premiums on Thursday.
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The sterling investor base can be stubborn one not listened to, as Swedish truck and bus manufacturer Scania found to its detriment when it launched its debut deal in the currency this week. Gatwick Airport and London & Quadrant had better receptions.
