CORP SNAPSHOT: Motability Operations braves volatile market tone

Feedback on Friday suggested the primary bond market could be very busy at the start of this week, but given political developments over the weekend just one corporate name has decided to go live on Monday with other go/no-go calls resulting in a no-go verdict.

Motability Operations Group plc is the one corp out with a three-part EUR/GBP social issue having reached out to investors at the end of last week.

The borrower has gone despite the Stoxx600 having dumped as much as 0.86% this morning and the euro hitting its lowest in a month, amid uncertainty created by a strong showing for the far right in the European elections - with French president Macron calling a snap election.

Monday's limited primary activity comes after corporate names continued to print in large volumes last week, and total supply surprised to the upside.

We saw another 17 euro tranches price worth EUR12.135bn thanks to 13 separate corporates (ex-HY). That marked an uptick from the previous week's EUR7.85bn and was more than even the highest EUR10bn estimate given by participants in our weekly issuance survey conducted the prior Friday.

The latest trades pushed the year-to-date single currency haul for the asset class beyond EUR200bn (EUR201.47bn), a milestone that we didn't hit until the end of August last year.

In fact, this is only the second time we have seen more than EUR200bn price by this time of year, the only other time being 2020 when EUR242.57bn had already been issued.

Summary of last week's EUR corp (ex-HY) trades:

Motability Operations returns with another social three-part

Taking the plunge this morning despite the volatile backdrop is UK borrower Motability Operations Group plc (A1/A), which is out with its triple-tranche benchmark social bond transaction after a recent roadshow.

Barclays, HSBC, Lloyds and NatWest Markets as Active Bookrunners have started working EUR denominated long 5yr and 11yr, as well as a GBP denominated 27yr, as follows:

** EUR long 5yr (Jan 2030) benchmark at m/s +125 area

** EUR 11yr (Jun 2035) benchmark at m/s +160 area

** GBP 27yr (Jun 2051) benchmark at mid-gilts (UKT 1.25% Jul 2051) +125 area

The issuance will be in line with the issuer's social bond framework, which is in alignment with the ICMA Social Bond Principles.

Motability Operations Group has already issued a three-part social transaction this year which was made up of EUR700m 5.5yr, EUR1bn 10yr & GBP500m 30yr socials in Jan.

The EUR bonds attracted combined orders of EUR5.5bn (EUR5.7bn peak) and landed with premiums of 17-20bps, whilst the sterling line priced with a smaller ~5bps NIC on books that finished at GBP1.4bn (GBP1.5bn peak).

Those lines were highlighted on the official comps list circulated Friday as follows:

*** EUR Comparables ***

(indicative bid side levels vs i-spread)

Ticker Rating Cpn(%) Issue Dt Mty Dt Tenor Amt( m) I+(bid) Social

MOTOPG A1/A/NR 3.625 Jan-24 Jul-29 5.1y 700 79 Y

MOTOPG A1/A/NR 3.500 Jan-23 Jan-31 7.1y 500 86 Y

MOTOPG A1/A/NR 3.875 Jan-24 Jan-34 9.6y 1000 109 Y

*** GBP Comparables ***

(indicative bid side levels vs gilts)

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

MOTOPG A1/A/NR 4.875 Jan-23 Jan-43 18.6y 350 85 Y

MOTOPG A1/A/NR 5.750 Sep-23 Sep-48 24.3y 400 88 Y

MOTOPG A1/A/NR 5.625 Jan-24 Jan-54 29.6y 500 95 Y

Referencing the comps as a whole and adjusting the curve, we saw fair value for the new euro lines at m/s +82 and +115 respectively, and in the gilts +low 90s on the sterling.

Burberry Group readies second ever trade

Joining a handful of names already in the pipeline is British luxury fashion house Burberry Group Plc (Baa2) which has hired HSBC, J.P. Morgan, Lloyds and NatWest Markets as Joint Active Bookrunners to arrange a series of fixed income investor calls commencing today (10-Jun).

A GBP 6yr senior unsecured benchmark transaction will follow, subject to market conditions.

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

Burberry Group has issued just one bond issue before in the form of GBP300m 1.125% Sep 2025s back in Sep 2020.

Already in the pipeline

** ITV plc (Baa3/BBB-/BBB-) mandated Barclays, BNP Paribas, Mizuho and NatWest Markets as Active Bookrunners to arrange a series of fixed income investor calls 10-11 Jun. A EUR500m no grow 8yr offering is expected to follow. The company has concurrently announced a capped cash tender offer on its outstanding EUR600m 1.375% notes due Sept 2026 (ISIN: XS2050543839)

** K+S AG (BBB-) hired BNP Paribas, Commerzbank, Helaba and UniCredit as Joint Bookrunners to arrange a series of fixed income investor calls 10-11 Jun. A EUR500m no grow 5yr bond offering is expected to follow. Use of proceeds will be general financing purposes, including the refinancing of existing debt

** Stedin Holding N.V (A-) hired BNP Paribas, ING, Rabobank and SEB as Joint Bookrunners to arrange a series of fixed income investor calls 11-Jun. A EUR500m no grow 7yr transaction will follow. An amount equal to the net proceeds of the issue of the notes will be allocated to finance and/or refinance a portfolio of green eligible projects as set out in Stedin's green finance framework

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