Taking the window directly after the Easter break when many market participants are still away from their desks has paid off for BNG Bank, with the Dutch agency raking in more than €4bn for its €1.5bn seven-year.
“That is definitely on the quite successful side of BNG trades,” said a banker away from the deal.
The smaller name’s bond on Wednesday was the first SSA deal in the primary market this week, after the segment raised €17bn via eight deals the week before. Issuers which took that previous window were vying to get funding in via a pre-Easter window to ensure market participants were still at their desks – though BNG’s deal clearly did not suffer from a lack of depth.
“Market conditions are good,” a lead on the deal said, commenting on its timing. “Why not [print] when things are stable? Easter holidays are behind us; people are around. You have CPI coming … but we already planned to price well ahead of that.”
BNG’s print also got ahead of deals from major supranationals such as the European Financial Stability Facility and the European Union, the lead noted, though he said the timing was primarily about taking advantage of a stable market.
BNG’s deal maintains a good tone in the euro SSA market, a boon for issuers targeting next week’s window or even the day following the Dutch name’s print.
Leads BNP Paribas, Deutsche Bank, Morgan Stanley and Societe Generale set the spread at 6bp over mid-swaps, 2bp in from the guidance of plus 8bp. That left around 1bp–2bp of new issue concession, the banker away said.
That concession was “very reasonable given the fact that they were not eyeing a €500m no-grow,” he said. “For a solid €1.5bn, even if you deduct [the €600m JLM] interest in there, you have €3.4bn left, so more than two times subscription from outside the JLMs, which I think is very solid and will help [the bond perform] in secondary markets.”
The final €1.5bn size was €500m more than the €1bn target the issuer initially had in mind, the lead said.
The European Financial Stability Facility has provided the most visible supply lining up for next week’s window. It put out its latest RfP for the syndication the same morning as BNG’s deal. The banker away expected the supranational to make an intraday appearance on Monday, an approach EFSF used for its last deal in January.
BNG was not the only SSA eyeing this week’s window for euro issuance, however. A fellow Dutch name, Nederlandse Waterschapsbank, mandated Deutsche Bank, JP Morgan, Natixis and SEB for a 10-year water bond after the BNG print priced.