Hopes that the recession in the US is coming to an early close were raised by the National Association of Purchasing Managers (NAPM) index released on Wednesday, which was much stronger than expected. US and euro-zone government bonds fell sharply, and credit and stock markets globally rallied on the news. While the spectre of Enron continues to haunt the markets, bankers report a positive reception to primary issues despite the surrounding volatility. A revival in telecoms bonds dominated the secondary market, with spreads in the sector improving by up to 10bp, providing a positive background for Telecom Italia SpA, which will today (Friday) launch a Eu1bn FRN through Caboto-Gruppo IntesaBci, JP Morgan, Schroder Salomon Smith Barney and UniCredit Banca Mobiliare. The June 2005 bond, callable after two years, will be priced at 100bp-102bp, inside the 105bp price guidance, and may well be increased as a result of an oversubscribed book. The highlight of the week in the European market was undoubtedly a two tranche bond for Dutch retailer Ahold. The Eu600m 10 year segment of the financing was priced 7bp inside guidance, having been oversubscribed to the tune of Eu2bn, and the £500m 15 year came 7bp-12bp tighter, attracting a book of £1.25bn. Pharmaceutical company GlaxoSmithKline will next week launch the biggest ever sterling corporate bond, a £750m-£1bn deal of 30 years or longer via CSFB and SSSB. It will be the first offering by the company since the merger of Glaxo Wellcome and SmithKline Beecham, and the first deal by either since 1997. Scania will launch a Eu500m seven year bond today under the lead management of SSSB. Pricing is expected in the 130bp area over mid-swaps, wider than earlier expectations of 115bp-120bp over, which investors reportedly felt was too aggressive. However, the deal is said to be oversubscribed at the new price talk. French property company Société Foncière Lyonnaise, rated BBB, completes roadshows today ahead of issuing an inaugural benchmark issue via HSBC and JP Morgan as joint bookrunners and SG as joint lead manager. The Eu400m seven year bond will be launched next week. No price guidance is available, but comparable transactions for Hammerson and Klepierre trade in the 140bp area over mid-swaps. Parmalat Finance Corp, guaranteed by Parmalat SpA, will launch a small five year euro transaction early next week via Banca Akros-Gruppo BPM, Credit Suisse First Boston and MPS Finance Banca Mobiliare, to be targeted to the Italian retail investor base. Brisa-Autestradas de Portugal, A1/AA-, is expected to launch and price a Eu600m five year bond in the middle of next week. Pricing is expected in the mid-swaps plus mid-40s area. SSSB will run the books, with BCPI and UBS Warburg as joint leads. Natexis Banques Populaires, rated A3/A/AA-, is to launch a two year euro-denominated FRN. The bank will be bookrunner, with Deutsche Bank as joint lead manager. Finmeccanica SpA, rated Baa2/BBB (Moody's/Fitch), has set up a Eu1bn EMTN programme with Lehman Brothers and Merrill Lynch as joint arrangers. The programme provides for deals to be issued by Asterisque SA, guaranteed by Finmeccanica, and by the company itself. The Italian region of Tuscany, rated A3, is launching an Eu1.5bn EMTN program through Deutsche, Merrill Lynch and UBS Warburg. The first deal, due in March 2002, will be for Eu465m, with successive issues over the following five years. The turbulent borrowing strategy of Tomkins may bear fruit today if lead managers HSBC and UBS Warburg have succeeded in convincing the UK investor base that, although the company could not raise seven year euro funding at mid-swaps plus 250bp, a 10 year deal paying Gilts plus 260bp, equivalent to 205bp over swaps. They hope to raise a total of £200m.
December 07, 2001
