Two auto manufacturers managed to take out decent size on Tuesday as the euro investment-grade corporate market began the new year in a steady manner, though bankers hope the pace of supply will pick up in the coming days.
Toyota Motor Finance (Netherlands) printed its first dual-tranche transaction in euros, raising a total amount of €1.3bn, while RCI Banque hit its size expectation with a €750m July 2026 bond.
"The bookbuilding was slightly slower than expected but it was nothing too concerning as it was a busy day for financials," said a lead on the RCI trade.
Eleven financial institutions tapped the single currency, selling 16 tranches, including an AT1 from Credit Agricole. "A plethora of FIG transactions took a lot of the focus, but [Toyota] was able to print its largest trade in euros. It's the first proper day back in for the new year so it's normal to see investors taking longer than usual with people having to get back to their desks," said a lead on the Toyota deal.
The financing entity of Japan's Toyota Motor Corporation landed €750m three-year and €550m five-year bonds at mid-swaps plus 30bp and 55bp, respectively, paying 5bp concessions across both tranches, according to the lead. One banker away from the deal, though, reckoned the premium on the shorter tranche was 10bp.
The final books were above €1.6bn for the 2026 tranche and about €1.7bn for the 2028 note. Initial price thoughts were 60bp–65bp and 85bp area via Credit Agricole, DBS, Mizuho, Societe Generale and UniCredit.
Toyota Motor Finance (Netherlands), rated A1/A+ (Moody's/S&P), may partially use the proceeds for posting collateral with third-party hedge providers, rather than for on-lending to other Toyota entities. The company has established presence in the Uridashi market.
Toyota Motor Corp and Toyota Financial Services Corp are credit support providers of the new issue. TFSC, which is a holding company of Toyota's finance companies worldwide, is wholly owned by TMC.
RCI Banque's (Baa2/BBB–, Moody's/S&P) bond was launched at 162bp over swaps on a final order book of about €1.33bn. Initial pricing was 190bp area via BBVA, IMI - Intesa Sanpaolo, MUFG and Natixis. Leads saw fair value at 145bp.
French automobile manufacturer Renault's banking subsidiary was looking to raise between €500m and €750m.
Moody's changed Renault's outlook to stable from negative in November to reflect its improved profitability in the first half of 2022.
Unclear timing
Bankers say January is usually a FIG month. Still, they expect more supply to come later in the week. One issuer lining up a deal is Air France-KLM, which has mandated for a debut sustainability-linked bond comprising long three-year and/or long five-year notes. Either note will be for a minimum €300m.
The airline will hold calls on Wednesday and Thursday with Deutsche Bank, HSBC, Natixis (sole sustainability structuring advisor) and Societe Generale acting as global coordinators as well as joint active bookrunners along with CACIB. Proceeds include the partial repayment of the outstanding French State guaranteed senior bank loan granted in May 2020 following the outbreak of Covid-19.
Otherwise, there could be more autos and utilities to enter the fray. "There will be probably more corporate supply with some issuers potentially looking at this week - typically, autos and utilities print in the first two weeks of January. But the timing is very unclear and market-dependent for the more infrequent issuers," said the first banker.
A third DCM banker said there will be a healthy number of issues from utility sector next week.
Corporate supply continues to be slower than financials as FIG issuers jumped into the market as they did at the end of last year to capture improved market conditions. A fourth DCM banker said around 5% to 10% of financials' 2023 funding was accelerated to be completed in 2022, while corporates' pre-funding activity was not as big and hard to quantify in numbers.
"I think the start of this year feels very much like end of last year - all about FIG and corporates are sleeping," said a syndicate head.