The mood is upbeat at Linde. The new kid on the block was many people's choice for MTNWeek's best new borrower award 2001 and only two weeks ago it was hailed by the dealer community as the issuer making best use of its Euro-MTN programme behind SNS Bank. But the excitement has not gone to Linde's head. Erhard Wehlen, group treasurer at Linde, is pleased with his first year but promises that there is more to come. Wehlen says: "We are very proud of what we have achieved and that people have mentioned us as a good issuer. But we still have lots of room for improvement. We have built up a strong team including Stefan Hess who joined us with a lot of experience in the market. But we will continue our goal to be responsive and flexible. Our aim is to always be there if something appears for us in the market." And this approach seems to have worked. Linde has issued in eight different currencies since it set up its euro4 billion ($3.43 billion) MTN programme in April last year and has $1.78 billion outstanding off 31 trades. And for Wehlen the key to Linde's continued success is its search for new investors. Wehlen says: "We are always looking to diversify our investor base. And it's my job to ask questions like why haven't we done anything in Norway or Australia. We must be proactive. We follow the market and whenever an opportunity comes up for us we must be prepared to try it." Patricia Cuenllas, debt capital markets at BBVA, would agree. BBVA placed a euro20 million one-year reverse enquiry trade for Linde in February this year. And Cuenllas believes that the issuer's attitude to targeting new investors made it very easy to close the deal. She says: "Since the first time we spoke with Linde they were very open to working with us. That was particularly nice, as this does not always happen. They were very interested in placing their bonds in Spain and were very clear with their targets. On a monthly basis they send us what they are looking for in terms of spread, amount and maturity and this makes it very easy for us to see where we can work together. They are accessible and the private placement we did with them was quickly closed in a couple of days." But despite the issuer's coverage, Wehlen is not happy with its recent record in Japan. Wehlen says that Linde is keen to extend its maturity profile but the current demand in Japan has made this difficult. He says: "The Japanese have not been so active in the last couple of weeks in the maturities we are interested in. We have done only two deals out of Japan recently and this is something that we want to change. We are open to trading in Japan and will look to intensify the communication about Linde's story." Linde's reluctance to issue structured trades might account for its quiet spell in Japan. Linde has always said no to structures but as the issuer grows in experience it has become much more open to ideas from dealers, and is looking to do some structured trades in the future. Rachel King, head of MTNs at ABN Amro, which has led four trades for Linde in the last six weeks, has witnessed this change. She says: "Linde is prepared to be flexible with its levels and so we feel comfortable mentioning their name to investors. At the beginning they said no to structures, preferring only light structures, but now they are more open. When approached with possible structures they are quick in coming back to us and this makes it easier to work with them." King continues: "Linde's investor base has increased and is now pretty global. Selling their name has not been difficult. As they are not a telecom or an auto they are seen as an alternative buy." But although Wehlen believes that Linde, which produces industrial gases, is a safe option for investors looking for single-A paper, he asserts that Linde's line of business makes it difficult to sell to investors. He says: "People know that we have a conservative approach and have experienced stable development of our group. But unlike the auto sector it is more difficult for people to see our product, so our story has to be explained." Cuenllas, at BBVA, has not found it too hard to explain. She says: "At the beginning of this year Linde was not a very familiar name to Spanish investors. But as it is a single-A-rated name and we are marketing its name among our investors, Linde is becoming more popular in Spain. Unlike other more volatile sectors, which have experienced downgrading, Linde is very well positioned on its A3 rating, making the investors feel very comfortable with its paper." Wehlen says he is concerned that too many issuers are joining what he considers to be an already busy market, but he does have some advice for companies looking to set up a new programme. He says: "We have taken the advice of dealers about where we should position ourselves and you need to listen to them. They have the knowledge of the market. Also you must be active in the market. I do not think that you can be successful if you do only two or three deals a year. Investors must be able to trust you. They have to know that you have a constant presence in the market."
June 01, 2001
