CORP SNAPSHOT: Woolworths finally emerges from the pipeline

IG corporates looked as though they had returned to the side-lines on Tuesday, despite European equities seen extending yesterday’s gains at the open, until a late arrival hit the screens at 09:30 London time.

That was namely Aussie retailer Woolworths Group Limited which has decided that today is the day to take the plunge with its EUR 7.5yr trade having wrapped up a roadshow almost two-weeks ago before being side-lined by trade war associated volatility.

Woolworths has gone with this week’s issuance window shrinking quickly ahead of Thursday’s ECB verdict which proceeds the long Easter holiday weekend.

The borrower will have been encouraged to go by Monday’s duo of issuers were able to get their deals away, albeit with larger NICs than we have been accustomed to this year.

As a reminder, Nederlandse Gasunie (EUR 10yr) and General Mills Inc (EUR 7yr) represented the corporate arena at the start of the week, with the pair taking EUR750m apiece out the market via their opportunistic trades.

The pair appeared to take a pragmatic approach to pricing with both issuers printing with 10bps NICs having started 45-50bps and 45bps back of fair value respectively, perhaps not a shock at a time where uncertainty remained in broader markets.

The price revisions came after demand peaked at EUR3.1bn on General Mills and EUR3.2bn on Gasunie, but whilst all orders stayed on board for the former, Gasunie saw final orders drop considerably to EUR2bn at the final count.

In the secondary market this morning and the General Mills deal is outperforming where it is trading 3bps inside its m/s +130 reoffer, whilst the Gasunie issue is bid 1.5bps tighter than the m/s +107 landing spread.

Monday’s activity came after volatility limited corporate issuance to just EUR1.2bn from two issuers across the whole of last week. So, even before today’s deal, we have already beaten last week’s total and are set to get closer to the latest average estimate of EUR3bn.

Woolworths finally takes the plunge

** Australian retail giant Woolworths Group Limited (Baa2/BBB) mandated BNP Paribas, Citigroup, Goldman Sachs, HSBC and ING as Joint Bookrunners to arrange a series of European fixed income investor meetings commencing on 31-Mar until 2-Apr. A EUR500m no grow 7.5yr senior unsecured offering has finally emerged

IPTs: Books open for EUR500m no grow Oct 2032s at m/s +180 area

• The notes are expected to be rated Baa2 by Moody’s and BBB by S&P
• Funds from the new issue are to be used for general corporate purposes, which may include, amongst other things, the refinancing of existing outstanding indebtedness
• The deal was initially being touted as a benchmark size, but to give complete clarity, the borrower has capped the deal size at EUR500m will not grow
• Woolworths has just one euro trade outstanding in the form of a EUR500m debut 0.375% Nov 2028 sustainability-linked bond launched in Sep 2021 at m/s +60 on demand which finished at EUR2.1bn (EUR2.9bn peak)
• That SLB was spotted by leads at i +110 when the initial mandate was announced back on 26-Mar, but that has since widened out and included on the updated official comps list circulated this morning at +126
• Given the borrower’s paucity of outstanding debt, and the moves seen in secondary over the last couple of weeks, fair value for the new offering is rather subjective

** Indicative Bid-Side Levels vs i **

Issue Date Ticker Amt (m) Coupon Maturity I-Sprd Rating

Sep-21 WOWAU 550 0.375 Nov-28 126 Baa2 / BBB / NR

Sep-24 CAFP 750 3.625 Oct-32 131 NR / BBB / NR
Mar-25 ADNA 500 3.250 Mar-33 112 Baa1 / BBB+ / NR
Feb-23 TSCOLN 500 4.250 Feb-31 122 Baa3 / BBB- / BBB-

Recent mid BBB supply

Apr-25 GIS 750 3.600 Apr-32 127 Baa2/BBB

In the pipeline

** Australian diversified energy infrastructure business AusNet Services Holding Pty Limited (Baa1/BBB+) mandated BNP Paribas, Citigroup, ING and SMBC to arrange a series of fixed income investor meetings and calls commencing 2-4 Apr. A EUR 10yr benchmark senior unsecured transaction may follow

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

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