Monday’s deals were a key test of investor appetite for supply after last week’s deluge sparked early signs of indigestion.
A €2bn deal from French pharmaceutical company Sanofi in particular was set to gauge market depth.
Leads opened books on a minimum €300m 3.5-year floater at three month Euribor plus 40bp area, a six-year fixed benchmark at mid-swaps plus 55bp area and a 10-year fixed benchmark at mid-swaps plus 70-75bp.
Leads Bank of America Merrill Lynch, HSBC, Societe Generale and UniCredit set the final spreads at Euribor plus 30bp, mid-swaps plus 50bp, and mid-swaps plus 65bp, and the tranches were later sized at €750m, €500m and €750m respectively.
Leads used Sanofi’s 1.875% September 2020s at mid-swaps plus 30bp, a 1.125% March 2022 at plus 39bp, a 2.5% November 2023 at plus 48bp, and a 1.75% September 2026s at plus 52bp.
Based on this, fair value on the six-year was around mid-swaps plus 35bp and for the 10-year was plus 48/50bp, leaving around 15bp of new issue premium on both fixed pieces.
Bankers away from the deal placed fair value on the floater at Euribor plus 30bp.
Order books closed at €3bn – a somewhat slimmer oversubscription than typically seen in previous weeks.
Too much too soon?
The Sanofi trade comes as syndicate managers and investors alike are warning of too much supply being introduced during the same market sessions, and say more caution should be applied to ensure better secondary performances.
“Deals are getting done, but perhaps not with the smooth execution of the week before,” one syndicate manager said.
The yield on Energias de Portugal’s hybrid, for example, jumped to 5.89% on Monday from pricing at 5.5% last week, while Telefonica’s 1.477% September 2021 paper is bid 14bp wider over mid-swaps, according to Tradeweb.
Shell’s March 2022s are bid 3bp wider than reoffer and the September 2025s 2.5bp wider on Monday afternoon.
“I don’t understand the logic and sense of Apple and Shell coming on the same day, and Shell doing a €3.4bn deal from a €5.25 book, I find it a bit cavalier to push the size quite so much,” another syndicate manager said.
“This market couldn’t take this much supply and people have to be very careful from now on. I strongly disagree with people sizing it in this manner.”
Pernod and Statkraft stay safe with eight-year no-grows
French beverages producer Pernod Ricard made its annual trip to the European capital markets on Monday with a €500m no-grow eight-year deal.
Leads started marketing at mid-swaps plus 125bp area.
IPTs were around 25bp back of the issuer’s 2.125% 2024s, bid at 104bp pre-announcement.
BAML and Natixis are global coordinators, and bookrunners are BAML (B&D), Barclays, DB, MUFG, Natixis, and SMBC Nikko.
The issuer is rated Baa3 (positive) by Moody’s and BBB- (stable) by S&P.
Norwegian state-owned electricity company Statkraft is back in the market after a five-month break.
Leads Commerzbank, JP Morgan (B&D), Nordea, and UniCredit started marketing a €500m no-grow eight-year at mid-swaps plus 90-95bp, before setting guidance at mid-swaps plus 85bp on orders in excess of €1.2bn.
Statkraft’s 2.5% November 2022s were bid at 61bp over mid-swaps, and its 6.625% April 2019s at 46bp over pre-announcement.
The issuer is rated Baa1/A- Moody’s/S&P, both stable.
Elsewhere, France’s La Poste (NR/A/A+) has priced a €250m tap of its 1.125% June 2025s at 45bp over the 0.5% May 2025 OAT.
The state-owned postal firm on Monday morning set guidance of 45bp area over French Treasuries, before setting the spread with the order book approaching €250m at the last update.
Credit Agricole, HSBC and Societe Generale led the transaction.
The deal takes the outstanding to a €750m size.
Finally, Industrial company Pentair finally emerged after meeting with investors at the end of August. Leads Citigroup, BAML and JP Morgan started marketing a €500m four-year deal at mid-swaps plus 225bp area, before final terms were set at the same level at plus 225bp.
The Baa2/BBB rated borrower is headquartered in the UK, but operates mainly in the US; the upcoming deal is the company’s first euro issue.
OMV readies hybrid
OMV is the latest oil and gas company to prepare a hybrid offer after last week’s EdP deal.
The transaction is expected to be a €1.5bn dual-tranche with six and 10-year call dates, according to a lead.
Each tranche is expected to be €500m-€750m.
Bankers expect further commodity companies to tap the market to ease pressure from tumbling raw material prices.
“I don’t think Shell taking a big chunk out of the market will affect OMV - there’s a different audience for hybrids” a lead said.
OMV (rated A3/A- by Moody’s/Fitch) mandated Barclays and
Deutsche Bank as joint structuring advisers and joint active bookrunners, and BNP Paribas, Societe Generale and UniCredit as active bookrunners to arrange European investor meetings from Wednesday September 16.
Campari prepares first euro deal in three years
Davide Campari-Milano has mandated BNP Paribas, Bank of America Merrill Lynch, Deutsche Bank, Societe Generale, and UniCredit to arrange a series of investor meetings in Europe from Thursday September 17.
A euro-denominated Reg S senior unsecured deal may follow.
Campari is major player in the global beverage industry.
The meetings will begin in London with one-on-ones and a group lunch. They will then move to Paris on Friday before wrapping up in Milan on Monday September 21 with a group lunch and one-on-ones.
Unrated Campari was last in the market in October 2012 with a €400m 4.5% October 2019 offer. That paper is bid at 166bp over mid-swaps, according to Tradeweb.
ProSiebenSat stalls 7yr
Elsewhere, ProSiebenSat.1 Media said it is not proceeding with its planned seven-year euro bond sale after mandating Commerzbank, MUFG, SEB, SG and UniCredit last week.
The European media company held the call on Thursday 10 September at 2pm CET.
A lead on the deal said the company has specific pricing in mind, which didn’t correlate to investor feedback during the call.
“It doesn’t help that there’s been so much supply and that a lot of it has performed badly in secondary. Investors are demanding bigger premiums. But the company is not desperate for funding so they’ve left it until they can get the terms they want,” the lead said.
