Europe Financial Bond: Novo Banco’s €400m Tier 2 10-year bond

It was big, bold, complicated – and a blowout deal. Facing regulatory challenges, market volatility, rising rates, and doubtful investors, drugstore chain CVS Health’s US$40bn nine-part jumbo US dollar bond issue to back the acquisition of health insurer Aetna set a record, a precedent for pricing, and was the US high-grade market’s third biggest issue ever. The deal was also seen as a turning point for the M&A market. The order book reached US$120bn at one point, with proceeds earmarked to fund CVS’s US$69bn acquisition. The March 6 deal...

German pharmaceutical company Bayer’s US$15bn eight-tranche offering in June was one of the biggest ever deals in the US dollar market in 144A/Reg S format and formed a vital part of a complex funding strategy for its purchase of US agrochemical company Monsanto (see Corporate Issuer for more). At US$66bn, the Monsanto acquisition was the largest outbound M&A transaction by a German acquirer, and the largest all-cash deal ever. And the bumper deal took an equally huge financing package. Bayer’s Yankee bond was one of the last pieces in a big...

The strong foundations provided by a cohesive team are key to creating a winning formula. BNP Paribas has championed this view for a number of years and has reaped the rewards of fielding an experienced line-up well able to execute business in any environment. With rates on the rise, quantitative easing drawing to a close and political squabbles creating headwinds, the backdrop in 2018 became increasingly demanding. But this was not something that disadvantaged the French bank. “Previously, it was difficult to differentiate yourself because...

In a high-yield market dominated by headline-grabbing LBOs, executing a challenging trade wasn’t enough to stand out from the crowd. Italian pharmaceutical Recordati managed to be noticed, pricing in October the largest LBO out of Italy against a market increasingly spooked by the country’s budget drama. It achieved this despite presenting a highly complicated structure to an increasingly wary investor base. The €650m seven-year non-call one floater and €650m seven-year non-call three fixed-rate notes were sold to fund the purchase of a 51.8%...

Tightening currency basis swaps, easing geopolitical tensions between the US and North Korea and clarifications on holdings of loss-absorbing bonds provided a trio of tailwinds for the yen bond market in 2018, and Mizuho Securities was ahead of the game on all three fronts. Five-year dollar/yen basis swaps tightened from the –90bp area in early 2017 to around –50bp during IFR’s review period, making the yen market more attractive for foreign borrowers. Japan’s Financial Services Agency in April provided relief to many Japanese regional banks...

Booming demand for loss-absorbing senior debt emerged as a key theme in the yen market in 2018, and Lloyds Banking Group was at the forefront of the trend, bringing the first deal to draw the attention of regional bank investors following a clarification of bank capital rules. The UK bank’s triple-tranche offering in May, sold from its holding company to count towards the EU’s definition of total loss-absorbing capacity, kicked off a run of similar deals as other global issuers lined up to tap a new group of Japanese buyers. Lloyds raised an...

From the very first transaction priced during the IFR awards period – a senior unsecured debut from the Principality Building Society – to the last – a tap and refinancing of Center Parcs’ whole business securitisation – NatWest Markets kept itself busy in the sterling bond arena. In between, it priced more than 100 other deals for issuers across the borrowing spectrum from around a dozen different jurisdictions. But volume – and the resulting increased market share – was just one string to the bank’s bow. It was augmented by a more cerebral...

Tackling the challenges posed by a post-Libor world is no mean feat, but the European Investment Bank took a bold step in 2018 when it priced the first ever bond linked to the newly reformed sterling overnight index average (Sonia). The £1bn five-year FRN set the blueprint for further issuance in the market, which went on to grow to £6.3bn in just over four months, spurring not just other public-sector issuers such as the World Bank and the Asian Development Bank but also financial sector borrowers. A previous attempt in 2010 to open the market...

For many years it had been the poor second in the Swiss franc bond market, but UBS has finally caught up with its larger rival, at times even beating it in the league tables over the course of 2018, despite a reduced syndicate function. In the end, Credit Suisse sneaked ahead in the league table but UBS had the more impressive story. A decade ago, UBS had only half of Credit Suisse’s market share, but a strong vision and long-term plan from Manuel Gadient, head of debt capital markets and syndicate for Switzerland, turned the firm around....

Nestle made a rare appearance in its domestic market, selling a SFr1.5bn dual-tranche six and 10-year bond that exemplified one of the major themes running through the year. Where 2017 had been a year of new corporate names coming with smaller and frequently lower-rated or unrated deals, 2018 saw a resurgence of “national champions” – household names bringing big, flashy trades. Nestle printed one of the biggest and flashiest deals ever in the Swiss franc market in early June, after several weeks of monitoring the market. With an investor...

Few bonds over the decades can claim a potentially revolutionary impact on capital markets, but the World Bank and Commonwealth Bank of Australia won that right with the world’s first public offering of blockchain bonds. The International Bank for Reconstruction and Development’s A$110m (US$82m) 2.2% two-year Kangaroo may be modest in size and short in tenor, but its implications could be huge if the groundbreaking trade is replicated and improved to establish a new, more efficient template for global bond issuance. Blockchain advocates...