The autumn new issue season in the euro sector will start with a bang next week with Allgemeine Hypothekenbank leading a slew of deals with its Eu5bn jumbo Pfandbrief. The issue will be launched on Wednesday via joint bookrunners ABN Amro, Deutsche, DG Bank, Dresdner Kleinwort Benson and WestLB. Bankers also expect Mannesmann's five year Eu2bn issue to emerge next week via a lead management group of Deutsche, Dresdner Kleinwort Benson and Warburg Dillon Read. The market is expecting pricing of around Euribor plus 40bp - back from the Euribor level of its 10 year, which was marked down when the generous price talk surfaced. Mannesmann's readiness to pay up for a successful deal will be welcomed when some borrowers are pushing for tight deals in what is set to be a possibly unfriendly and certainly crowded market. Land Sachsen-Anhalt's long awaited Eu1bn transaction is expected via Deutsche and Warburg Dillon Read as early as next week in five or seven years. Almost all frequent borrowers are asking banks for proposals. Deutsche Ausgleichsbank is believed to be looking to bring a seven year euro deal, possibly via Morgan Stanley Dean Witter, while the EIB is still mulling a reopening of its 2005 deal to create a new EARN and DePfa is said to be looking at a trade of up to Eu5bn. Bankers are more bullish about the prospects for corporate supply in general than for arbitrage driven financials. Although many companies are considering launching deals, most have no pressing need for funds and can take a flexible approach. German engineering group Voigt is set to make its international markets debut with a Eu250m issue in September. The seven to 10 year transaction will be lead managed by Merrill Lynch and JP Morgan. Imperial Tobacco has mandated ABN Amro and Merrill Lynch for its debut euro transaction. Investor presentations will start in London on September 3 with a Eu500m five year bond expected shortly after. Imperial Tobacco's debt is rated Baa2 by Moody's and BBB by Standard & Poor's. Other corporate names on the roster include Swedish Match which has mandated ABN Amro to bring a Eu300m seven or 10 year bond, Elf Aquitaine, Air Liquide and Essilor. Lehman has the mandate to bring an issue for Italian white goods manufacturer Merloni. Royal Sun Alliance will next month launch a Eu500m 20 year non-call 10 subordinated transaction. The deal, to be lead managed by Merrill and JP Morgan, will be roadshowed in the second week of September. One deal taken out of the pipeline is the Japan Development Bank's Eu500m 12 year transaction which was due to be launched last Friday. Volatile yen swap spreads prohibited the borrower from completing the yen leg of its planned swap and lead managers JP Morgan and Paribas were forced to postpone the issue. The project may be revived later in the year. ING Groep pre-empted the September rush by launching a Eu1bn 10 year bond via ING Barings/BBL. The issue was increased from Eu750m and enjoyed a very warm reception, the lead and syndicate reporting good demand from a range of institutional and retail investors, the latter attracted by the 5.5% coupon and the name. In contrast to the euro sector, the dollar pipeline remains thin in the face of continued volatility and lack of European investor appetite for the currency. One deal in prospect, however, is a $400m five or seven year transaction for Swedish corporate Atlas Copco reported to be mandated to CSFB and Merrill Lynch. Global format and liquidity are crucial to dollar transactions these days and the DaimlerChrysler transaction had both ingredients. Its three tranche bond was increased to $4.5bn from an initially targeted $3bn and all tranches were priced within the price talk, tightening further after being freed to trade. The bonds relied heavily on US distribution, just 15% being sold internationally. Bankers now keenly await the FOMC meeting on Tuesday to bring some direction and stability back to the dollar sector, with expectations of a 25bp rise in rates already priced into the market. n
August 20, 1999
