2018 bond deals of the year: SSAs

In the last year that sovereigns, supranationals and agencies could enjoy the effects of the European Central Bank’s quantitative easing programme — but still had to cope with the Fed pushing up rates — GlobalCapital’s SSA team used its editorial judgement, with inspiration from GC’s world-famous bond comments and patented BondMarker app, to pick what it felt were the top trades of the year. The team strove to find deals that were not just the biggest — it looked for trades that set pricing markers, were innovative and brave or that made an impression in other ways. GC presents the winners here. Congratulations to the issuers and banks involved.

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BEST SOVEREIGN DOLLAR DEAL OF THE YEAR

Kingdom of Sweden

$3bn 2.375% February 2023

BMO Capital Markets, Goldman Sachs, HSBC, Nordea

Sovereign dollar deals were thin on the ground in 2018, but Sweden is a regular visitor with two or three trades in the currency a year that rarely disappoint — and this deal in January received a superlative reception.

Bankers on the deal called it a “phenomenal” trade that had the biggest ever book on a Swedish foreign currency bond issue.

Onlookers were particularly impressed with the book, which they described as “amazing”, pointing in particular to the $4.75bn it had garnered at just the indications of interest stage.

All of that resulted in a healthy average score of 8.04 on BondMarker.

BEST SOVEREIGN EURO DEAL OF THE YEAR

Republic of Portugal

€4bn 2.125% October 2028

Barclays, Citi, Crédit Agricole, Goldman Sachs, JP Morgan, Novo Banco

This deal nearly snuck into the coveted — and rare — 9.0 average in BondMarker, with a score of 8.94.

While smaller than some other sovereign euro deals this year, Portugal’s trade was notable as the January deal came just a couple of months after the sovereign had been in sub-investment grade territory.

The book of over €18.8bn was Portugal’s largest ever and the coupon was 200bp lower than its 10 year euro benchmark just one year before — despite any benefits from QE dwindling due to central banks having been nearly full on its paper.

BEST SUPRANATIONAL DOLLAR DEAL OF THE YEAR

International Finance Corp

$2bn 2.875% July 2023

Barclays, JP Morgan, Mizuho, TD Securities

IFC took full advantage of a dollar market bereft of heavy issuance — thanks to the euro/dollar basis swap scaring away euro funders — to bring a trade that not only had next to no new issue concession but also broke the 9.0 BondMarker barrier to score 9.02.

Bankers described the deal as a “fantastic outcome”, with many noting how the trade managed to entice US investors — a factor helped by the IFC’s decision to include Wells Fargo as senior co-lead manager, augmenting the distribution of its joint lead managers in tapping additional US investors.

Leads also pointed to the smart timing — bringing the trade ahead of the expected glut of deals in September.

BEST SUPRANATIONAL EURO DEAL OF THE YEAR

European Stability Mechanism

€4bn 0.1% July 2023

Morgan Stanley, Société Générale, UniCredit

This was a trade that won praise thanks to the issuer’s decision to take a different direction to the herd, which ended up winning an 8.73 average score on BondMarker.

Describing the deal as “fantastic”, one banker not involved in the trade said that the ESM could have done the “obvious thing” and copied the seven or 10 year maturities that other SSAs had been bringing in euros. But instead it did something “very smart” by going to the shorter end of the curve.

That delivered orders of over €9bn, while the new issue premium of 3bp also “semi-redefined concessions for the SSA universe”, according to one of the leads. Before this deal, new issue premiums had gone from their earlier 2bp-3bp up to 6bp-7bp, he added.

BEST AGENCY DOLLAR DEAL OF THE YEAR

KfW

$3bn 2.875% April 2028

Bank of America Merrill Lynch, JP Morgan, TD Securities

It is not often that a trade elicits admitted jealousy from bankers that missed out on the deal but this was one such case. In a year where 10 year dollar issuance was rare, bringing a jumbo $3bn transaction was no small feat — recognised by an average BondMarker score of 8.93.

But perhaps the best way to describe what was KfW’s first 10 year dollar benchmark in almost three years, came from those looking on: “absolute blow-out”, “I love that trade”, “very impressive” and “kudos to KfW”.

The deal also came in January, a couple of weeks after a 10 year trade by Asian Development Bank — but KfW beat it for size and pricing, showing that ADB had not mopped up all the demand in the tenor.

BEST AGENCY EURO DEAL OF THE YEAR

KfW

€5bn 0.625% January 2028

BNP Paribas, Commerzbank, Goldman Sachs

Another entry for KfW that did not quite match its 10 year dollar benchmark in the BondMarker stakes, but still scored an impressive 8.62 average.

The German agency started the year as it meant to go on with this deal in the second week of January drawing its largest ever book in the 10 year tenor — despite coming in the same week as fellow big hitter the European Financial Stability Facility.

From a wider market perspective, the deal also “made everyone comfortable” that the euro sector was healthy, said bankers, particularly after a weak trade from another agency in the first week of the year.

SUB-SOVEREIGN DEAL OF THE YEAR

State of North Rhine-Westphalia

€1bn 1.65% February 2038

Bank of America Merrill Lynch, Deutsche Bank, JP Morgan, Nord LB

Land NRW is no stranger to the long end of the curve and even printed longer dated trades than this in 2018, but the BondMarker average score of 8.82 showed how much bankers thought of this deal in February.

It was hard to find a particular standout attribute — as one banker away from the deal said at the time: “Good timing, good spread, swaps positive and a good spread to Germany — a good result all in all.”

SSA STERLING DEAL OF THE YEAR

United Kingdom

£6bn 1.625% Oct 2071

Barclays, Deutsche Bank, Goldman Sachs, NatWest Markets

The UK Debt Management Office consistently delivers top quality trades but this deal was something else, scoring an average of 9.47 on BondMarker — making it comfortably the highest scoring deal of the year in any category.

Aside from the fact it broke the UK DMO’s record nominal book and then went on to perform in secondary, what particularly impressed bankers watching from the sidelines was how stable the overall Gilt market was on the day of the deal — a testament to the issuer and the banks involved.

SSA SRI DEAL OF THE YEAR

Société du Grand Paris

€1.75bn 1.125% Oct 2028 green bond

Barclays, BNP Paribas, Crédit Agricole, HSBC, Natixis, Société Générale

A deal that not only impressed by coming from the first ever dedicated green Euro Medium Term Note programme, this trade was also from an issuer making its debut in the bond markets.

That it went on to print €1.75bn — in the upper reaches in size terms for the green bond market, excepting sovereigns — was a testament to the investor work done by the issuer and the story it had to tell.

As one onlooking banker said at the time of pricing in October: “A slam-dunk trade for a new issuer."