Investor-Issuer Profiles

Busan’s $5bn response proves bond appetite South Korea’s Busan Bank drew a whopping $5bn of orders for its $300m bond last week, proving the ravenous appetite for investment grade bonds despite the heavy issuance since the start of the year.

¡El Magnifico! Santander, LTRO revive Spanish covered bonds The strength of the Long Term Refinancing Operation rally was on vivid display this week as Santander shrugged off a heap of negatives to rack up one of the largest ever order books for a covered bond. Despite its flop last time out, a poorly received recent asset liability management (ALM) exercise and the cédulas sector’s eight month washout, the €2bn benchmark restarted Spanish supply in stellar fashion on Wednesday — and paved the way for more risk-on deals.

Sberbank’s one-two punch re-opens Russian market Russia’s state owned savings bank Sberbank managed to hit up the market for an additional $250m late on Thursday, having already raised $1.5bn through a dual participation note on Tuesday.

Belgian covered bond law to set new standards Prospects for the birth of a Belgian covered bond market have taken a leap forward with the recent formation of a new government after a year and a half of political deadlock. Market participants say that the chance of a covered bond law in the country is finally looking stronger.

Secured funding swept up in LTRO frenzy In a flurry of activity that offered another glimpse of the spare cash washing around the European banking sector after the ECB’s first Long Term Refinancing Operation (LTRO) in December, Spain’s CatalunyaCaixa and Banco Popular Español launched tender offers this week, buying back ABS, covered bonds and hybrids.

BNZ maturity switch hits investor sweet spot Bank of New Zealand priced a €500m three year deal this week, only two weeks after it was forced to postpone a five year trade in the same currency. The shorter maturity and capped deal size yielded a far more positive result, with over 100 accounts contributing to an order book that was three times covered.

Erste defies negative headlines with record Austrian book Erste Group Bank comfortably printed €1bn off the back of the largest ever book for an Austrian covered bond this week. The successful 10 year offering has opened the door for other Austrian names and countered the negative headlines following the sovereign’s recent downgrade.

Tight repo leads to fears of failed covered bond trades The secondary market in short dated covered bonds is in danger of breaking, and though it is not there yet, there are concerns over ‘forced delivery squeezes’ in the repo market which may lead to failed trades.

Kiwi covered bond flies with debut Swiss franc issue ANZ Bank hit the Swiss franc covered bond jackpot for the second time in two weeks on Thursday when its New Zealand subsidiary issued a Sfr500m dual tranche note. The market’s first Kiwi covered bond followed the parent’s blowout Sfr750m debut on January 20.

DNB Bank sweeps up with one tranche debut Samurai DnB Bank priced its debut Samurai last Friday, a ¥65bn ($844m) five year deal at 140bp over yen swaps, up more than 50% from its initial target size of ¥40bn.

Lesser known credits tag on to senior rally Investors that did not tuck into the market at the start of the recent FIG rally now have little choice but to buy, bankers said this week.

Intesa puzzles market with €1.5bn senior return After three months without issuance from a peripheral European borrower, Italy’s Intesa Sanpaolo lit up the senior unsecured market this week with a €1.5bn print that was almost twice oversubscribed. But the deal split opinion as to whether it was an example of muscle flexing or a costly piece of braggadocio.

Nordea demand opens door to tier two renaissance More dated sub debt deals are on their way, said bankers, after the success of Nordea’s lower tier two issue this week. Some 350 accounts placed more than €4bn of orders for the Swedish bank’s lower tier two bond issue, the first in euros since May 2011.

LM back in spotlight with Lloyds, Bank of Italy moves Bank liability management is set for a second wind as issuers continue launching deals. Lloyds TSB Bank, Banco Popular Español and Catalunya Banc became the latest on Thursday — and after the Bank of Italy loosened its stance on buybacks and exchanges.

Yapi Kredi bond opens Turkish primary market Turkish private bank Yapi ve Kredi Bankasi on Wednesday issued a $500m senior unsecured bond. The deal was the first private bank trade out of Turkey and European emerging markets this year and opens up the possibility that more Turkish bank issuance will follow.

Markit Data 1240

Market braced for more supply as blackouts end Senior unsecured FIG market participants were looking forward to more supply on Friday, after a strong week in the asset class. With recent new issues performing well and many issuers coming out of blackout next week, bankers expected issuers to take advantage of the positive market backdrop.

Arkle sees strong demand Bankers say that Lloyds Banking Group’s Arkle RMBS is seeing good demand, with books going subject on all tranches except the five year sterling.

Banks eye tier two options after Nordea demand tops €4bn FIG bankers say that the heavy demand seen for Nordea’s lower tier two issue is leading other banks to look at their options for callable non-step issues, but they warn that the floodgates are not open yet.

FIG LM back in spotlight with Lloyds, Bank of Italy announcements Bank liability management is set for a second wind, as issuers continue launching deals — Lloyds TSB Bank and Catalunya Banc became the latest on Thursday — and after the Bank of Italy loosened its stance on buybacks and exchanges.

New issues tighten as investors forced to play catch-up Investors sceptical at the start of the recent rally in the FIG market now have little choice but to enter the market, said bankers on Thursday.

Sberbank shocks with punchy pricing Russia’s state owned savings bank Sberbank priced a $1.5bn dual tranche loan participation note on Tuesday, surprising some Russian corporate and bank issuers with the tight pricing achieved on the deal.

Yapi Kredi opens Turkish primary market with $500m bond Turkish private bank Yapi ve Kredi Bankasi on Wednesday issued a $500m senior unsecured bond.

Intesa proves a point with €1.5bn print Intesa Sanpaolo wanted to prove it had access to wholesale markets when it printed €1.5bn of 18 month fixed rate senior paper on Tuesday, EuroWeek understands.

Nordea’s tier two tests non-step market Nordea Bank’s 10 year non-call five lower tier two deal is being watched closely as a test of the market for non-step subordinated debt issues.

Senior moves down credit curve as Commerz, 3CIF print Senior unsecured investors lapped up supply from some of the market’s higher beta credits on Wednesday, after Intesa Sanpaolo flung the doors open for peripheral issuers on Tuesday.

Woori kicks off international funding with Thai baht bond South Korea’s Woori Bank raised Bt5bn ($161m) from its first ever bond issue in Thailand’s local debt market, part of a plan to raise around $1bn this year from international investors.

Yapı Kredi releases eye-catching levels for $500m five year Yapı ve Kredi Bankasi has released price guidance for a $500m five year note at 7%-7.125% via lead managers JP Morgan, Standard Chartered Bank and Unicredit Bank. The 144a/Reg S senior unsecured note could be priced as early as Wednesday.

Arkle returns to yen The provisional capital structure for Lloyds Banking Group’s Arkle 2012-1 RMBS includes a three year yen tranche, following the example of Santander UK’s Holmes 2012-1. Before this year, the only UK deal to offer yen had been Arkle 2010-2.

Barclays creates €7bn collateral from Italian mortgage book Barclays has structured a €7bn securitisation of Italian mortgages, using the Mercurio Mortgage Finance programme. The deal will be retained, giving Barclays an extra slug of eligible collateral for the ECB’s LTRO facility, ahead of the second tender at the end of February 28.

BPCE tightens French curve with premium-free 10 year BPCE opened the long end of the market for French issuers on Monday, setting a strong benchmark with an aggressively priced €750m 10 year deal.

Intesa returns to senior with 18 months, yield over 4% Intesa Sanpaolo this morning launched an 18 month fixed rate senior unsecured deal, becoming the first Italian bank to tap the market in 2012.

Proposed Russian LPN tax could derail Eurobond train A new withholding tax suggested by Russia's deputy finance minister Sergei Shatalov in a letter to the Russian Federal Tax Service could make Eurobond issuance much less attractive to Russian companies.

Sberbank releases talk for new LPN Sberbank has released price guidance on its dollar benchmark five year senior unsecured loan participation notes in the low 5% region. The notes will be 144a/RegS.

BPCE launches ‘expensive’ 10 year France’s BPCE on Monday launched a 10 year senior transaction, offering the deal just 25bp over where bankers said the issuer’s five year bonds were trading.

Clashes over Cashes as bondholders fight BNPP (Updated) BNP Paribas held firm on Friday amid a bondholder rebellion as investors spurned a cash tender offer it made earlier in the week for €3bn of Fortis Bank convertible and hybrid equity-linked securities (Cashes).

FIG markets back to pre-crisis days as Lloyds TSB triumphs With investors scrabbling for bank paper after a powerful secondary rally and a slowdown in new issues since the year’s initial rush, bankers are urging financial issuers to seize a compelling opportunity to raise new debt. A €1.5bn Lloyds TSB senior deal that attracted almost €4.5bn of orders in just 90 minutes on Thursday morning underlined the point.

Commerz turns to synthetic securitisation to plug capital hole Commerzbank has launched a synthetic securitisation of its Mittelstand loan portfolio, aiming to sell €160m of equity risk and €30m of mezzanine risk as part of frantic efforts by the bank to fill its €2.3bn capital hole.

BPI covered buyback heralds LM trend Portugal’s Banco BPI launched the second covered bond tender of the year on Thursday and market participants expect more to follow ahead of the European Central Bank’s second Long Term Refinancing Operation in February.

UniCredit’s new €25bn programme not public Suggestions that UniCredit plans to raise a €25bn covered bond to take advantage of investor demand are misleading, a member of its treasury team told EuroWeek.

Eurozone supply scarcity sets market on fire At first glance, issuance of all covered bonds appears to be little changed this year from the last. But look a bit closer and it becomes clear that the market has been starved of publicly syndicated Eurozone benchmarks.

Non-Eurozone issuers keep up supply as continent goes quiet With many European bank issuers either in blackout or happily ensconced in the ECB’s generous bosom, this week’s four benchmark deals all came from outside the Eurozone, continuing the year’s predominant trend in the covered bond market.

ABN AMRO extends Swiss curve to five years on return A recent secondary market rally and investors’ renewed appetite for senior unsecured risk encouraged ABN Amro Bank to move further along the maturity curve this week when it priced its second Swiss franc trade of the month. Its Sfr185m 2.5% five year bullet followed a Sfr250m 1.5% two year note on January 11.

Nykredit dives into short end Denmark’s Nykredit said "extremely strong" market conditions pushed it to launch a two year floater on January 20, a deal bankers saw as an encouraging sign that the senior unsecured market is opening for a broader range of issuers.

CASA, UniCredit target €5.1bn buybacks as capital generation tops agenda for FIG Crédit Agricole and UniCredit offered to buy back up to €5.1bn of subordinated debt this week, highlighting the fact that despite January being a crucial month for funding, capital remains top of the agenda for Europe’s largest financial institutions.

Swiss Re issues new-style subordinated perp Swiss Re this week followed in the footsteps of Zürcher Kantonalbank, launching a debut new-style subordinated perpetual convertible note on Thursday, a Sfr200m minimum 7.25% non-call five year.

Aegon returns to dollar retail market for capital trade Capital and liquidity are not luxuries, Aegon said this week after it returned to the US dollar retail market following a five year absence with a tier two issue.

Hungry investors rush to Lloyds and Swedbank Lloyds and Swedbank capitalised on strong investor demand following a drop in primary supply this week, both bringing five year deals which achieved impressive levels of oversubscription.

Sberbank heads out on road, set to join Russian pipeline Sberbank began a non-deal roadshow in the UK and the US on Monday, arranged by Barclays Capital, BNP Paribas, Citi and Troika Dialog. The bank, which has just closed a merger with Troika (see page 54), plans to enter the Eurobond market in the second half of this year, according to analysts at Alfa Bank.

BTA brushes off vote loss to pursue restructuring BTA Bank is to seek a restructuring of its debt despite GDR holders’ refusal to consent to the move on Thursday. The 82% state-owned Kazakh bank, which on January 3 failed to make scheduled payments on its $2bn senior bonds, as well as on previously restructured discount debt and subordinated bonds, views the lost vote as no obstacle to negotiations, chairman Anvar Saidenov said.

Markit Data 1239

DnB NOR Samurai success as euro market digests supply As the euro market digested trades from Lloyds and Swedbank, DnB NOR Bank on Friday priced a ¥65bn ($844m) five year samurai at 140bp over yen swaps, beating its target size by ¥25bn.