Despite many dealers commenting that this year has been tough so far, the total raised from January 1 2002 to June 30 2002 still exceeds the first half of 2001 by $19 billion. Over $157.91 billion-worth has been raised in the private MTN market and the first two quarters of this year has seen over 1,400 more trades than last year's first half. The size of the private placement market has expanded by 14% compared to the first half of last year. Euro strengthens its hold on the market with an extra $8 billion-worth of debt in the first half of 2002, increasing its share of the market to 35%. And the pecking order of the top 10 currencies stays largely the same, although Czech koruna has risen in popularity, with 29 trades closed in 2002. Some have been more adventurous and have dipped into currencies such as Slovak koruna and Brazilian real (see the trades below). Maturities have come in dramatically this year. Almost 1,000 extra trades have been issued with a term under one year so far, although the average size at the short end has shrunk from $14 million to $6.6 million. Investors are wary of the long-dated sector, issuing just $26.37 billion-worth in the first half of 2002 compared to $35.51 billion-worth in the same period of 2001. Bank issuance has risen to $96.23 billion (an increase of 16.8% on the first half of 2001). But some corporates have been finding 2002 a difficult market. Private corporate finance issuers have raised over $11 billion so far this year, but private corporate issuers have suffered. Their issuance is down by $6.5 billion compared to last year and the recent spate of corporate credit downgrades will not help the sector's recovery in the second half of the year. Despite concerns over investor demand out of Japan at the beginning of the year and a dip of volumes in some sectors, dealers expect volumes to remain high for the rest of year. The market is optimistic that quality trades are in demand. MTNWeek asked some of the market's MTN desks to pick out the trades that have caught their attention in the first half of the year. ? EBRD Bookrunner: Deutsche Bank Size: $200 million Issue date: May 10 2002 Maturity date: May 12 2005 Structure: US dollar denominated, synthetic Turkish lira zero coupon Rating: Aaa Chris Jones, head of Euro-MTN trading at Deutsche Bank, says: "This note offered investors a US dollar denominated security, therefore acceptable by the major clearing systems, with a synthetic Turkish lira yield of 53%. Although on the surface this deal looks fairly straight forward the execution involved lengthy negotiations between all parties to come to a mutually satisfactory conclusion. The professionalism and patience of the treasury team at EBRD ensured that this deal came to market." ? European Investment Bank Bookrunner: Dresdner KW Size: Ft10 billion Issue date: July 18 2002 Maturity date: October 15 2012 Structure: Fixed-rate step-down Rating: Aaa Dresdner KW published this comment at the time of issue: "The key consideration for investors is their view regarding the timing and likelihood of Hungary's entry into EMU. The structure would probably profit if Hungary were to join EMU in 2007, which we expect to happen." ? GMAC International Finance Bookrunner: Lehman Brothers Size: euro300 million Issue date: January 18 2002 Maturity date: January 18 2005 Structure: Fixed rate Rating: A2 Brian McCarthy, head of Euro-MTN trading at Lehman Brothers, says: "There was a bit of a lull in the market in the first few days of the New Year, yet the auto demand was robust for a three-year fixed-rate note. All bonds were placed by the end of the day and subsequently performed very well in the secondary market." ? KfW International Finance Bookrunner: JPMorgan Size: $77 million Issue date: April 24 2002 Maturity date: April 25 2022 Structure: 20-year non-call-five zero coupon Rating: AAA Alex Haidas, head of Euro-MTN trading at JPMorgan, says: "This trade was for a priority issuer and was placed with an Asian investor that was new to the market and to JPMorgan. We were in competition for the swap, and were able to win, based on our superior coverage and distribution. The trade was a result of a global effort, with pricing in different time zones." ? Nordic Investment Bank Bookrunner: HSBC Size: HK$1 billion Issue date: March 5 2002 Maturity date: March 5 2007 Structure: Fixed rate Rating: Aaa Evie Christodoulidou, Euro-MTN trading at HSBC, says: "This was the first major supranational deal in Hong Kong dollar for a year and opened up the market to a window of opportunity. The Hong Kong dollar market has been rife ever since." ? Republic of Italy Bookrunner: CSFB Size: euro400 million Issue date: January 22 2002 Maturity date: January 22 2012 Structure: Floating rate Rating: Aa2 Julie Edinburgh, Euro-MTN trading at CSFB, says: "Although this trade is not considered a private placement by the MTNWeek definition (which excludes trades over $250 million), it is a private placement in the sense that it was a non-syndicated deal privately placed with one investor. It is one of very few sovereign private placements this year, certainly the only one that combines such a significant size with a long maturity. But you couldn't look at this trade without being in awe of the wonderful arbitrage funding it provided the Republic of Italy. I believe at the time of pricing, this bond offered Italy an all-in spread of more than 8 basis points through BTPs!" ? World Bank Bookrunner: Salomon Smith Barney Size: Brazilian real R80 million Issue date: March 22 2002 Maturity date: April 4 2005 Structure: Zero coupon Rating: Aaa Chris Cox, head of Euro-MTN trading at Salomon Smith Barney, says: "This trade is unusual. It is linked to a currency that is not freely transferrable and was done when the situation in Argentina was not all that stable." ? Deutsche Bank, London Bookrunner: Deutsche Bank Size: euro20 million Issue date: March 25 2002 Maturity date: March 25 2007 Structure: Inflation-linked, credit- linked and CDO-linked Rating: Aa3 Chris Jones, head of Euro-MTN trading at Deutsche Bank, says: "This deal is highly complex and provides the investor with an inflation-protected, yield-enhanced return by providing additional exposure to Telecom Italia and a Deutsche Bank-led synthetic CDO. This product was engineered to suit our client's very precise financial requirements. The execution of this deal involved the liaison of several different trading and structuring desks and was a testament to the cross-selling capabilities of Deutsche Bank."
July 05, 2002
