DAILY CLOSE: Corps active but DB's jumbo AT1 hogs limelight
By Matthew Barrett November 14 2024 at 16:04
** The overall issuance pace slowed after a frenetic couple of sessions for the European bond market, but there was still supply for investors to sink their teeth into. Corporate issuers continued to dominate proceedings where another four from the sector were out with opportunistic trades across EUR and GBP, whilst Deutsche Bank (EUR PNC7 AT1) was the only other name out. Thursday’s euro trades, which totalled EUR4.1bn, put the week at EUR24.5bn (ex-HY) and closer to the highest average estimate of EUR30bn given in our latest weekly euro issuance poll. See IGM’s DAILY EUR NICS & BOOKS for the full pricing steps of each of Thursday’s single currency trades
** Another four IG corporates tapped the market and raised EUR2.6bn in the single currency (and a further GBP400m in sterling), putting the weekly euro haul for the asset class at EUR16.45bn and further beyond the highest supply estimate of EUR12.5bn – whilst it also propelled this week to the third highest euro volume this year. Leading the way was BP plc with a dual-currency EUR750m PNC7 (0 NIC) and GBP400m PNC5.25 two-part hybrid, with it marking just the second time it visited the European subordinated market ever. Elsewhere Thursday, senior paper was on offer from CTP N.V (EUR500m no grow 8yr green; 0 NIC), RCI Banque S.A (EUR500m Jul 2029 green; 7bp NIC) and Kering SA (EUR750m 10yr; 5bp NIC). Demand for the euro paper was again strong at a combined EUR6.7bn, but for a second straight session there was a noticeable drop in orderbooks that had earlier peaked at EUR10.5bn. We had also expected La Francaise des Jeux to emerge on the day with its debut EUR1.5bn no grow 6/9/12yr three-part having wrapped up a roadshow Wednesday, but via an update the issuer said the deal is now likely to be Friday’s business. French peer Roquette Freres concluded a roadshow of its own Thursday for an inaugural single currency trade (EUR 7yr senior & PNC5.25 hybrid), so that could also emerge at the end of what has already been a bumper week. See the IGM CORP SNAPSHOT
** In non-covered FIG, what Thursday lacked in terms of single currency deal numbers (one) was more than made up for by the sensational demand for the day’s sole deal where Deutsche Bank’s PNC 4/32 AT1 attracted a massive EUR10.5bn book, this year’s biggest in the asset class. Huge demand allowed 62.5bps to be carved off 8% area IPTs and the size to be set at EUR1.5bn, marking the joint largest euro AT1 seen this year and matching the EUR1.5bn size of its prior AT1 sold in June. That brought the YTD sales of euro AT1s to EUR19.4bn and further into record territory. Deutsche Bank’s deal lifted the week to EUR7.05bn but still short of the EUR8bn average guess. With a currently empty pipeline and one day left to go, whether we get to (or even past) that level remains to be seen, but demand is clearly there
** The SSA market drew a blank once again leaving the weekly tally at just EUR1bn from two individual transactions (Eurofima 10yr green and Land Bremen 5yr LSA). Two mandates emerged - one for a new 3yr digital bond from the European Investment Bank (EIB) and the other a EUR250m tap of an Oct 2028 FRN LSA from Land Schleswig Holstein. The latter will likely be Friday's business but even if both were to accelerate through the line before the weekend we would still likely fall well short of the week's expected EUR3bn target (from our latest estimates survey)
Friday's primary prospects
Corp:
** French betting and gaming operator gaming company La Francaise des Jeux (Baa1) hired BNP Paribas, Credit Agricole CIB and Societe Generale as Global Coordinators and Active Bookrunners, together with BofA Securities, CIC, Goldman Sachs Bank Europe SE, HSBC and Natixis as Active Bookrunners to arrange a series of fixed income investor calls 12-13 Nov. An inaugural multi-tranche EUR1.5bn of 6yr, 9yr, and 12yr (EUR500m no grow on each tranche) senior unsecured bond offering may follow. Net proceeds will be used by the issuer to refinance partially the bridge acquisition facility of EUR2bn entered into by the issuer with inter alia the Active Bookrunners or their affiliates in the context of the acquisition of Kindred
** Roquette Freres SA (BBB), a French family-owned global leader in plant-based ingredients and a provider of pharmaceutical excipients, mandated BNP Paribas, Credit Agricole CIB and Societe Generale as Global Coordinators along with CIC, Goldman Sachs Bank Europe SE, HSBC, JP Morgan, and Natixis as Active Bookrunners to arrange a series of fixed income investor meetings on 12-14 Nov. An inaugural EUR benchmark 7yr senior unsecured notes offering, expected to be rated BBB by S&P and an inaugural EUR PNC5.25 hybrid benchmark with an expected issue rating of BB+ by S&P, may follow. The estimated net proceeds of the issue of the notes will be used for the refinancing of, or replacement of the remaining available commitments under, the bridge acquisition facility granted to the Issuer pursuant to a bridge facility agreement entered into by the Issuer with some of the Joint Bookrunners or their affiliates in the context of the acquisition of most of the business, operations and activities of IFF’s Pharma Solutions segment, and in the case of senior notes only, and/or other facilities already used by the issuer for general corporate purposes
SSA:
** The European Investment Bank (Aaa/AAA/AAA) mandated BNP Paribas, HSBC and NatWest Markets to lead manage a new EUR 3yr Euro digital bond issuance
** The Federal State of Schleswig-Holstein (AAA) mandated DekaBank, LBBW and NORD/LB to lead manage its upcoming EUR250m increase of their outstanding EUR500m Oct 2028 FRN Landesschatzanweisung
** The IGM Roadshow Calendar is your one stop window on who, when and where. The calendar view provides an instant snapshot of which days are already earmarked for meetings in a convenient PDF format, with clickable links that take you directly to the known schedule
Thursday's broader market developments
** European stocks headed higher throughout the session carrying on positivity that emerged in the latter half of the prior session with Thursday’s momentum moving us back to unchanged for the week (Stoxx600). That came on the back of another weak handover from Asia, chalked up to ongoing concerns over Trump's agenda on trade and tariffs. Eurozone Industrial Production softened to -2% MoM (prev 1.5%) and missed the -1.4% consensus but despite this being an indication that industry may be weighing on economic activity the Q3 GDP figure came in line with expectations at 0.4% QoQ
** Stoxx600 steadily climbed throughout the day, peaking at +1.21% led by IT (+3.07%) after upbeat comments from ASML. All sub-sectors in the green
** Govvies: EGBs outperforming particularly at the front end, GER 2yr -5.4bp on the back of EZ data marginally boosting chances of near-term ECB rate cuts. Gilt/Bund 10yr spread peaked at 216bp (a 25-month wide)
** Data:
- SP Oct F CPI in line at 1.8% (prev 1.5%)
- EC Q3 P GDP QoQ in line at 0.4% (prev 0.4%)
- EC Sep Industrial Production missed at -2.0% (exp -1.4%, prev rev down to 1.5% from 1.8%)
- US Oct PPI Final Demand in line at 0.2% (prev revised up to 0.1% from 0.0%)
- US Weekly Initial marginally lower than f/c at 217k (exp 220k, prev 221k)
- US Continuing Jobless Claims in line at 1873k (prev revised down to 1884k from 1892k)
What to watch Friday – Busy end to week for data
** Key Data: CH Oct Industrial Production (02:00), CH Oct Retail Sales (02:00), UK Sep Industrial/Manufacturing Production (07:00), US Sep Trade Balance (07:00), UK Q3 P GDP (07:00), UK Q3 Imports/Exports (07:00), FR Oct F CPI (07:45), IT Oct F CPI (09:00), US Nov Empire Manufacturing (13:30), US Oct Retail Sales (13:30), US Oct Import Price Index (13:30), US Oct Industrial Production (14:15) and US Sep Business Inventories (15:00)
** Key Events: Fed’s Collins (14:00) & Williams (18:15) speak along with ECB’s Lane (15:00) & Cipollone (15:15)
** Auctions: No major term auctions scheduled for Friday 15th Nov
** Earnings: 5 Stoxx600 companies report
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