CORP SNAPSHOT: Five issuers jump in post-Fed despite volatile tone

Broader risk markets remain volatile on Thursday with stocks giving back a chunk of yesterday's gains (seen in the wake of a soft US inflation print) after Fed Chairman Powell struck a rather hawkish tone alongside the FOMC rate hold last night.

Despite the volatility, IG corporates continue to access the market and show the resilience of the credit market, with no fewer than five live across euros and sterling today.

That comes after ITV (8yr) and K+S (5yr) jumped in amid the risk-on tone Wednesday despite the headline risk events with rare euro offerings to finance upcoming maturities.

Both offered some clarity with EUR500m no grow sizes on their transactions from the outset which, along with attractive looking IPTs, helped drive initial demand.

However, both issuers experienced some price sensitivity, albeit to differing degrees.

K+S saw final demand come in at EUR2.1bn from a EUR2.6bn peak following a 40bps spread compression from IPTs, whilst seeing a bigger drop was ITV. Orders at the last count totalled EUR1.25bn versus an earlier high of EUR2.1bn before a 32.5bps refinement from IPTs to reoffer.

On the back of that and deciding to jump in with opportunistic offerings on Thursday, despite the difficult backdrop, are Heidelberg Materials (debut EUR Jul 2034 green), BT Group (EUR Jan 2034), Dell Bank (EUR500m Jun 2029) and Reckitt Benckiser (EUR Jun 2029 & GBP Dec 2032). Burberry Group (GBP Jun 2030) is also out having reached out to investors earlier in the week.

Heidelberg Materials make green debut

** German building material company Heidelberg Materials AG (Baa2/BBB) this morning hired BofA Securities, Citi, Commerzbank, ING (ESG Structuring Advisor), SEB and Standard Chartered Bank AG as Joint Bookrunners for a debut EUR 10yr (Jul 2034) green benchmark.

IPTs: Books open at m/s +170-175

- An amount equivalent to the net amount of the proceeds from the Green Bond will be used for the financing and/or refinancing of a portfolio of eligible green projects as defined and described in Heidelberg Materials' Green Finance Framework

- This is an inaugural green offering but Heidelberg Materials has issued sustainability-linked bonds the last two times it hit the market. Those May 2032s and Nov 2033s, both launched last year, were spotted by leads at +103 and +131 bid by leads pre-announcement

- Extrapolating the existing SLBs and adjusting slightly for a green format, one banker running the trade saw fair value for the Jul 2034s at m/s +135

Comps:

(Bid side vs I-Sprd)

HEIGR Baa2/BBB 3.750% May-32 ms+103 SLB

HEIGR Baa2/BBB 4.875% Nov-33 ms+131 SLB

CRHID Baa1/BBB+ 4.000% Jul-31 ms+91

CRHID Baa1/BBB+ 4.250% Jul-35 ms+113

HOLNSW Baa1/BBB+ 0.625% Jan-33 ms+103

SGOFP Baa1/BBB+ 2.625% Aug-32 ms+83 SLB

SGOFP Baa1/BBB+ 3.625% Apr-34 ms+94 Green

BT offers first euro senior of 2024

** UK telecom BT Group plc (Baa2/BBB/BBB) is out with a new opportunistic EUR Jan 2034 benchmark trade under the guidance of Barclays, J.P Morgan, Lloyds, NatWest Markets and Societe Generale as Joint Lead Managers

IPTs: Books open at m/s +145 area

- Issuer: British Telecommunications plc

- Funds are to be used for general corporate purposes, including the repayment of existing indebtedness. Note the borrower has a EUR1.1bn 1% ex-7yr bond maturing in Nov this year

- BT has issued one euro line this year in the form of a EUR750m 5.125% non-call Oct 2029 hybrid in Mar that was 2.73x covered at its 5.25% yield reoffer

- The issuer last tapped the euro senior market in Aug last year when raising EUR850m via a 4.25% Jan 2033 line (its longest senior bond) which was highlighted on the official comps list sent this morning at +102 bid

- Equating for the curve extension we saw fair value for the new Jan 2034s at around m/s +110 (35bps NIC)

British Telecommunications EUR benchmark Jan-34: Comps

Indicative pre-announcement comps:

Ticker Ratings (M/S/F) EURmm CPN Maturity I+ Bid

BRITEL Baa2 / BBB / BBB 500 3.375 Aug-32 95

BRITEL Baa2 / BBB / BBB 850 4.25 Jan-33 102

DT Baa1 / BBB+/ BBB+ 750 3.25 Mar-36 77

ORAFP Baa1 / BBB+ / BBB+ 1000 0.625 Dec-33 73

TELEFO Baa3 / BBB- / BBB 850 4.183 Nov-33 106

VOD Baa2 / BBB / BBB 650 3.75 Dec-34 98

VZ Baa1 / BBB+ / A- 1250 4.75 Oct-34 100

Dell extends fledgling EUR curve with 5s

** Dell Bank International D.A.C (Baa2), a wholly owned Irish subsidiary of US tech company Dell Technologies, is working an opportunistic EUR500m no grow 5yr (Jun 2029) line via Joint Bookrunners BNP Paribas, BofA, Commerzbank and HSBC

IPTs: Marketing has started at m/s +110 area

- Use of proceeds: General funding purposes

- Dell last tapped the single currency market in Oct 2022 when pricing a EUR500m 4.5% Oct 2027 bond which is its longest outstanding bond in the currency

- Looking at Dell's fledgling euro curve and also a USD Oct 2029 line which leads highlighted on the official comps list, we saw the starting NIC at 35-40bps on this one although the FV number is fairly subjective

- Books were over EUR500m at the first update

*** DELL BANK : COMPARABLES ***

DELL (Baa2) 0.500% Oct-26 @ MS+43

DELL (Baa2) 4.500% Oct-27 @ MS+56

DELL (Baa2/BBB) Tech $ 5.300% Oct-29 @ T+80 (eq ~ MS+70)

Reckitt Benckiser sticks with dual-currency approach

** Reckitt Benckiser Group plc (A3/A-) is out with an opportunistic two-part EUR 5yr (Jun 2029) and GBP 8.5yr (Dec 2032) two-part benchmark offering through Reckitt Benckiser Treasury Services PLC. Active Bookrunners are JP Morgan, Morgan Stanley and Santander

IPTs:

* EUR 5yr benchmark at m/s +110 area

* GBP 8.5yr benchmark at mid gilts (UKT 4.25% Jun 2032) +120 area

- Use of proceeds: General corporate purposes

- Reckitt's last bond market visit came in Sep last year when it brought EUR650m Sep 2028s (EUR1.3bn bk) and EUR750m Sep 2033s (EUR2.3bn bk) alongside GBP300m Dec 2038s (GBP1.35bn bk)

- Looking at the borrower's most recently issued lines and adjusting the curves accordingly, fair value for the new euro bond in the m/s +70-75 and the gilts +low 80s region on the sterling

£ £ Reckitt Benckiser dual tranche EUR/GBP comps £ £

Reckitt EUR comps

Ticker Rating Amt Out Coupon Maturity M-spread

RECKITT A3/A- 850 0.375 May-26 +43

RECKITT A3/A- 650 3.625 Sep-28 +67

RECKITT A3/A- 850 0.75 May-30 +67

RECKITT A3/A- 750 3.875 Sep-33 +104

UNILEVER A1/A+ 550 3.30 Jun-29 +41

DIAGEO A3/A- 750 1.50 Jun-29 +47

P&G Aa3/AA- 500 1.25 Oct-29 +37

DANONE Baa1/BBB+ 800 3.706 Nov-29 +59

NESTLE Aa3/AA- 500 3.50 Jan-30 +34

PERNOD Baa1/BBB+ 700 3.375 Nov-30 +81

£££ Reckitt GBP comps £££

Ticker Rating Amt Out Coupon Maturity UKT-spread

RECKITT A3/A- 500 1.75 May-32 +82

RECKITT A3/A- 300 5.625 Dec-38 +88

NESTLE Aa3/AA- 600 2.50 Apr-32 +55

DIAGEO A3/A- 400 1.25 Mar-33 +64

PEPSI A1/A+ 450 3.55 July-34 +55

Burberry creates GBP curve

** British luxury fashion house Burberry Group Plc (Baa2) hired HSBC, J.P. Morgan, Lloyds and NatWest Markets as Joint Active Bookrunners to arrange a series of fixed income investor calls commencing 10-Jun. A GBP 6yr (Jun 2030) senior unsecured benchmark transaction is now out. Passive Bookrunners are CCB, SocGen and UniCredit

IPTs: Marketing has started at mid-gilts (UKT 0.375% Oct 2030) +200 area

- Investor calls concluded Wednesday with 50+ accounts engaged

- Net proceeds from the new issue will be used for general corporate purposes

- Guarantors are Burberry Limited (UK), Burberry Limited (US), Burberry (Wholesale) Limited and Burberry Asia Limited

- Burberry Group has issued just one bond issue before in the form of GBP300m 1.125% Sep 2025s back in Sep 2020. That line was highlighted on the comps list at +122 bid pre-announcement

* Comparables *

Indicative bid side levels vs gilts

* Luxury / Retail Comparables *

Ticker Rating Cpn(%) Issue Dt Mty Dt Tenor Amt(£m) G+(bid)

BRBYLN Baa2/NR/NR 1.125 Sep-20 Sep-25 1.3y 300 122

KERFP NR/A-/NR 5.125 Nov-23 Nov-26 2.5y 400 83

KERFP NR/A-/NR 5.000 Nov-23 Nov-32 8.5y 400 102

TSCOLN Baa3/BBB-/BBB- 2.750 Apr-20 Apr-30 5.9y 450 97

TSCOLN Baa3/BBB-/BBB- 5.125 May-24 May-34 10.0y 350 133

NXTLN Baa2/BBB/NR 3.625 May-16 May-28 3.9y 300 87

MARSPE Ba1/BBB-/NR 3.250 Jul-19 Jul-27 3.1y 250 157

* Other BBB Comparables *

Ticker Rating Cpn(%) Issue Dt Mty Dt Tenor Amt(£m) G+(bid)

GM Baa2/BBB/BBB 5.500% Jan-24 Jan-30 5.6y 350 152

TRAGR Baa2/BBB/NR 5.625% Jan-24 Jan-29 4.6y 450 158

IHGLN NR/BBB/NR 3.375% Oct-20 Oct-28 4.3y 400 116

Performance tracker of recent EUR IG/split-rated benchmark deals

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