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SECONDARY TRADING

SECONDARY TRADING

The healthy tone that the senior financial institution bond market has enjoyed since the beginning of the year continued this week, though issuance slowed down. The main talking point was Banca Intesa's Eu600m five year fixed rate issue, led by Caboto, Citigroup and Deutsche Bank, since the issuer was able to print a fixed rate transaction flat in line with where it would have issued an FRN.

Property agent Befimmo is in the market with an Eu350m five year revolver via Fortis Bank and ING.

All eyes were on the Federal Reserve this week, with its new chairman's thoughts and economic data being scrutinised particularly closely for clues to the next move in interest rates.

British Land this week successfully completed the refinancing of its Werretown sale and leaseback of J Sainsbury supermarkets when Morgan Stanley and RBS priced the £201m of new FRNs. The new notes came at the tight end of or inside guidance, while the exchanged fixed rate notes tightened dramatically from their reissue spreads. The double-A rated notes came at 33bp over Libor, 2bp inside talk, while the triple-B rated tranche came at 85bp. The short dated 'D1' tranche, linked by Fitch to Sainsbury's rating, was not offered.

Nelnet, the second largest US student loan provider, this week launched a $2bn transaction, from which it issued a Eu420.52m tranche, the first time the company has issued a euro-denominated tranche.

BNP Paribas has launched the first notes off a new CDO programme for BlackRock Financial Management, the US CDO manager.

AXA Investment Managers will shortly start marketing an innovative hybrid CDO of US mezzanine ABS and CDOs. The deal is a follow-up to a similar deal Axa closed last year via Wachovia Securities, called Opus and worth $670m. The second deal is also expected to be arranged by Wachovia.

Lehman Brothers this week priced two securitisations of non-conforming and near-prime mortgages for its UK subsidiaries Preferred Mortgages and Southern Pacific Mortgages. The two deals this week — which follow a sub-prime issue for Southern Pacific two weeks ago — bring the groups' tally of MBS issuance to three securitisations in just 14 days, totalling £1.245bn between them.