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2019 bond deals of the year: public sector borrowers

By EuroWeek Editor 1
13 Dec 2019

2019 proved more fruitful for supranational, sovereign and agency borrowers than was expected in 2018 — in part thanks to a rejuvenation of the ECB’s asset purchase programme and a wholesale return to dovish monetary policies. GlobalCapital’s SSA team used its editorial judgment, with inspiration from GC’s world famous bond comments, to pick the top trades of the year. We strove to find deals that were not just the biggest, but that set pricing markers, were innovative and brave, or made an impression in other ways. GC presents the winners here. Congratulations to the issuers and banks involved.

Review2019Sovereign Dollar bond of the Year

Italian Republic  

$2.5bn 2.375% October 2024, $2bn 2.875% October 2029, $2.5bn 4% October 2049

Barclays, HSBC, JP Morgan

Dollar bond issues from eurozone sovereigns are rare — especially from Italy.

Italy last came to the dollar market in 2010, but it had been planning to return to the currency for some time. It had hoped to make its comeback in 2018, but ended up postponing due to volatility in the Italian bond market, before finalising plans for a date in October 2019.

But the deal was worth the wait. Italy received more than $18bn of orders across the deal’s three tranches.

“Even in the best times, getting 30 year dollars is an impressive achievement,” said a head of SSA syndicate away from the deal. “It’s a great sign for Italy’s future as a regular dollar issuer.”

Sovereign Euro bond of the Year

Hellenic Republic

€2.5bn 3.875% March 2029

BNP Paribas, Citi, Credit Suisse, Goldman Sachs, HSBC, JP Morgan 

Greece strode past another milestone in March, on its road back to becoming a frequent issuer in the capital markets with its first 10 year bond since 2010, soon after a two-notch rating upgrade from Moody’s.

The sovereign built a final book of over €11.8bn, which, at the time, was its largest book on any of its syndications since it had made its comeback to the capital markets in April 2014. It was also able to keep the proportion allocated to hedge funds to only 11%.

Greece was able to tap the line in October, adding an additional €1.5bn.

Supranational Dollar bond of the Year

Asian Infrastructure Investment Bank 

$2.5bn 2.25% May 2024

Bank of China, Barclays, Crédit Agricole, Goldman Sachs, TD Securities

This deal was a long time coming. AIIB started marketing this offer almost two years before it came to market in May and met around 250 investors. AIIB’s debut gave the issuer a place among the very top supranational names in the capital markets.

The bond was sold at mid-swaps plus 6bp, mostly to high quality investors around the world — primarily central banks and bank treasuries. Just over half of the deal was placed outside Asia. 

“For a new issuer they probably overachieved, in that they arguably haven’t paid any new issue concession,” said a head of syndicate away from the deal.

Supranational Euro bond of the Year

European Investment Bank

€1bn €str plus 20bp October 2022 

BNP Paribas, Crédit Agricole, Deutsche Bank, HSBC, RBC Capital Markets, TD Securities

The European Investment Bank got the €str ball rolling in October with the first benchmark bond linked to the rate, which came after 18 months of preparatory work by the supranational.

Euro floaters are not an easy sell, given the ECB’s well-established dovish leanings. But despite concerns of a lack investor demand before the trade, EIB received a final book of over €2bn, which allowed it to comfortably print a size of €1bn.

Bank treasuries were always likely to drive demand, but there was also strong interest from other investors, including central banks and other real money accounts.

The deal used the same structure that the EIB had pioneered for Sonia and Sofr FRNs, with a coupon calculation that is compounded over the quarterly payment period with a five-day look back period.

Agency Dollar bond of the Year

Bank Nederlandse Gemeenten 

$3bn 1.5% September 2022

HSBC, Morgan Stanley, Scotiabank, TD Securities

BNG hit the dollar bond market at the end of August, a period of difficult market conditions, braving volatility in swap spreads and underlying rates. 

Nevertheless, BNG braved the turbulence and managed to find enough demand to print its biggest bond in any currency. 

Bankers said that setting the spread at the deal’s announcement helped, giving investors clarity on the price of the bond.

The timing was also important, as BNG waited for the EIB and KfW to announce their trades first. 

It also came before a crucial set of central bank meetings in September, in which the ECB announced a comprehensive stimulus package and the US Federal Reserve cut rates for the second time in 2019. 

Agency Euro bond of the Year


€5bn 0% June 2022

BNP Paribas, JP Morgan, TD Securities

This was KfW’s first three year euro benchmark bond since 2015, as it made a strategic choice in March to return to the maturity as part of its efforts to be a frequent issuer across the whole curve. 

Despite a negative yield, investors backed the move — the final book closed at over €7.7bn and the bond immediately performed in the secondary market.

“I was not convinced a €5bn deal was on the table and I thought it would have needed a significant new issue premium,” said an SSA banker away from the deal. “Clearly, I was wrong.”

Sub-Sovereign bond of the Year

Autonomous Community of the Balearic Islands

€400m 1.549% November 2028

Bankia, BBVA, Caixabank, HSBC

The Balearic Islands returned to the bond markets in February, after a seven year hiatus. 

The deal kick-started the return of Spanish regions to the bond markets, after the central government ruled that regions meeting their deficit and budget targets could access the capital markets  while still being part of the government’s Fondo de Liquidez Autonómica (FLA) programme (or Regional Liquidity Fund). 

The tensions over Catalan independence and Spain’s handling of the issue meant that market conditions were not easy for the Balearic Islands’ comeback, but in spite of that, the issuer was able to sell its biggest-ever single tranche bond.

Sterling SSA bond of the Year

World Bank 

£1.25bn Sonia plus 27bp May 2024

Bank of America, HSBC, TD Securities

The World Bank set out in May to raise £500m, and to push out its Sonia curve to five years, but the overwhelming demand it received meant that it was able to raise £1.25bn.

That made this deal not only the largest Sonia bond ever from an SSA borrower, but the largest sterling floater from an SSA borrower since Network Rail’s in 2004. It was also the second largest sterling bond of any format from a non-UK SSA issuer in 2019.

The trade was a superb follow-up after the World Bank had become the first supranational to issue a Sonia-linked floating rate note in 2018.

SSA SRI bond of the Year

Kingdom of the Netherlands 

€5.985bn 0.5% January 2040 green bond

Green bond structuring adviser: ABN Amro

Independent green consultant: Crédit Agricole

Advisers: ABN Amro, HSBC, Nordea

The Netherlands’ green bond in May marked several firsts for the market. It was the first from a triple-A sovereign. The Netherlands was the first eurozone sovereign to issue its first green bond via auction instead of syndication. And, perhaps most importantly, it broke new ground in the classification of green accounts by allowing investors to register as green investors before the transaction in order to receive priority in the allocation process. 

The book closed with a total bid volume of €21.2bn, the second largest order book ever for the Netherlands. 

By EuroWeek Editor 1
13 Dec 2019