Multiple-issuer shelves have got the market talking. When a group of Spanish savings banks got together to sign a programme last year it was one of the most innovative facilities to have been signed. Since then four Nordic banks have done the same and dealers suggest that other groups of issuers are becoming interested in setting up similar platforms. Caja Canarias, Caja San Fernando, El Monte and Sa Nostra were the four Spanish savings banks (cajas) that signed up to the euro2 billion ($1.83 billion) programme in September last year. Their interest in the market had been aroused by the MTN success enjoyed by their counterparts in France, Germany and Italy. Confederacion Espanolas de Cajas de Ahorros (CECA), the association of Spanish savings banks, was keen to act upon this interest and began the whole process off. But as a senior CECA spokesman comments, it was aware that it would not be able to set up the programme on its own. He says: "The impetus for the programme really started with CECA itself but we knew we would need a partner on the programme who had a greater working knowledge of the MTN market. So we turned to BNP Paribas (BNP) with whom we already had a strong institutional relationship." Meetings were held between BNP and CECA in May 2000 with the intention of setting up MTN shelves for those cajas who wanted them. But Daniel Cogoi, global head of MTNs at BNP, explains that during the discussions it became clear that this approach would not work. He says: "We knew that it would be interesting for each caja to have its own programme. But when we actually did the numbers, it didn't add up. One of the main reasons for using the multiple-issuer idea was down to economies of scale. Some of these cajas were just too small to set up their own programme." So the solution was to enable all the banks to issue off one facility. The process could have been complicated as Cogoi explains. He says: "We couldn't really set up four programmes in parallel and then combine them into one at the end. It had to be one single programme from the outset, not only for the four issuers who originally signed, but also for everyone else joining." Yet no unsolvable problems were encountered and the programme was signed on schedule. And as Stefan Lindemann, head of debt capital markets for Iberia at BNP, explains, it was certainly innovative in nature. He says: "This is essentially a new Spanish sector making an appearance on the international market - how better to do this than by grouping them together and making it a common cause? They were all savings banks, all have similar legal frameworks and a common purpose, which is a social welfare goal. This was the main advantage - by pooling their resources we got a wider investor demand. It is certainly the first programme of its type." There is no debt limit allocated to each bank within the programme's ceiling and CECA makes sure that all of the banks work closely with each other to limit any competition on the programme. And the number of issuers continues to grow - in January, Caixasabadell and Unicaja were added to the facility. And on September 25 this year, CajaSur became the seventh Spanish savings bank to sign up to the programme. CECA is happy to see the programme's growth continue. Its spokesman says: "We were - and still are - open to all. We are happy to take all-comers to the programme and I would expect the number of issuers to reach 10 in the not too distant future." Issuance has also been strong so the shelf's limit was raised to euro3 billion in the recent update. There have been 10 issues off the programme so far. CECA was particularly pleased by the four debut trades, one by each of the original issuers. Its spokesman says: "The four simultaneous inaugural trades demonstrated the real cohesiveness of the programme, showing how well it could work." The trades were each between euro100 million and euro200 million, linked to 3m Euribor +30bp. And Lindemann, at BNP, believes that the issues can become more varied. He says: "We would welcome not only plain vanilla and FRNs, but also subordinated, senior and structured debt, and so on." So are we set to see more multiple issuer shelves in the future? Cogoi, at BNP, adds a word of caution. He says: "I think that is difficult to predict as there are a lot of factors involved in turning it into a reality. You need a homogenous group of issuers, which need to be coordinated and set on pursuing the same strategy at the same time." But he also believes this type of facility can work if properly executed. He says: "The cajas have achieved critical mass by combining forces as both the sector as well as the individual issuer are marketed to the investor. This has had a positive impact on both increased name recognition and reduced financing costs. In fact, we are discussing this type of programme with other issuers as well." And if the success enjoyed in Spain is anything to go by, the multiple-issuer programme certainly seems to be worth considering in the right circumstances. CECA's spokesman is a keen advocate of the multi-issuer shelf. He says: "We are recommending to all the cajas that they consider joining the programme and joining in on the success achieved so far."
October 05, 2001
