FIG SNAPSHOT: Fast start to week, full capital structure on offer

Faced with a busy line-up of events due later in the week, FIG issuers came out of the blocks quickly on Monday to test demand across the full capital structure.

Five issuers are working EUR deals (three in benchmark size and two via EUR500m no grow deals). Assuming all get safely over the line, that will see Monday’s session deliver at least EUR2.5bn in new paper, but more likely well over EUR3bn. There’s also fresh USD paper on offer too.

Monday’ trades are following on from Friday’s Swedish duo which came in the form of Swedbank AB (EUR750m from benchmark 4.5yr green SNP) and Svenska Handelsbanken AB (EUR500m no grow 12NC7 Tier 2).

It was Handelsbanken’s sub trade which most enthused buyers where books topped EUR3bn at the peak before being finalised at EUR2.4bn, although demand for Swedbank’s green SNP was hardly lacking at a peak of EUR2.2bn before easing to EUR1.4bn at the final count.

Both exercises proved economic too with Handelsbanken’s Tier 2 landing around flat to the estimated fair value level while Swedbank’s sale offered a slim concession in the low single digits.

In terms of the week as a whole, aggregate demand totalled EUR6.2bn for the EUR2.05bn total raised, sufficient to produce an average cover ratio of 3.07x, based on final book updates.

Orders had peaked at EUR8.25bn earlier in the execution process, during which last week’s issuers shaved an average of 30.5bps off IPTs. That was after the previous week’s EUR2.85bn in new paper attracted total orders worth EUR7.7bn.

The fast start being seen Monday suggests that either this week will be a front-loaded one, or that estimates submitted on Friday will turn out to be low. For the record, the average guess for non-covered EUR supply this week came in at EUR4bn, while the most bullish respondent thought as much as EUR6bn could price. Only time will tell.

Either way, the varied nature of deals on offer today will provide a useful gauge of conditions for both high and low-beta product.

Elsewhere to note, the pace of earnings from European banks accelerates this week, meaning that more would-be issuers will emerge from blackout.

In total, another 18 members of the Stoxx banks index report comprising a number of names that will be familiar to bond investors including HSBC, Jyske Bank, Banco Santander (Tue), Standard Chartered, Sydbank, RBI (Wed), Banco de Sabadell, BNP Paribas, Danske Bank, Erste Group Bank, CaixaBank, Intesa Sanpaolo, Societe Generale, ING Groep and BBVA (Thu). From the SMI index, UBS Group also reports (Thu).

Mediobanca repeats script with long 6NC5 snr pref

** Mediobanca – Banca di Credito Finanziario S.p.A., rated Baa1 (Stable) / BBB (Stable) / BBB (Stable) has mandated BNP PARIBAS, Citi, IMI-Intesa Sanpaolo, Mediobanca, Morgan Stanley (B&D), Santander on a EUR500m wng 15 January 2031 (optional redemption on 15 January 2030) Senior Preferred Notes issue, expected ratings Baa1 / BBB / BBB. Pay date 4 November. Interest Basis: [•]% per annum Fixed Rate, from (and including) the Issue Date to (but excluding) the Interest Rate Switch Date (the Fixed Rate Period). If not redeemed on the Interest Rate Switch Date (being the Optional Redemption Date), EURIBOR 3m+[•]% per annum Floating Rate, from (and including) the Interest Rate Switch Date to (but excluding) the Maturity Date (the Floating Rate Period). ISIN: IT0005620189.

IPTs: €MS+115bps area

• This marks the lender’s first senior pref sale since November last year which also came in the form of a EUR500m long 6NC5 (4.375% 2/30-29) which priced at m/s +140 into a EUR1.4bn book.
• That line was spotted by leads at i+79 (bid) in the comps list. Allowing for the additional curve would support a fair value estimate in the region of m/s +high 80s to 90 area which sources on and off the deal broadly concurred with.
• Books were above EUR1.5bn at the latest update.

Comps

Belfius Bank make rare visit to AT1 market with EUR500m PNC7 AT1

** Belfius Bank SA/NV, rated A1 Stable / A Stable / A- Stable by Moody’s / S&P / Fitch has mandated Belfius, BNP Paribas, BofA Securities, Citi (B&D), UBS Investment Bank on a EUR500m wng Undated Deeply Subordinated Additional Tier 1 Fixed Rate Resettable Callable Securities expected ratings Baa3 / BB+ by Moody’s / S&P. Pay date 6 November. First Reset Date 06-Nov-31. Listing: Official List of Luxembourg Stock Exchange. Denominations: EUR 200,000 + EUR 200,000. Governing Law: Belgian law. Rate of Interest: Fixed rate of [•]% p.a. until the First Reset Date, then resets at the First Reset Date and every 5 years thereafter at the prevailing 5-year mid-swap rate plus the Margin (no step-up). Payable semi-annually in arrears. Act/Act ICMA following unadjusted. Margin: [•]bps (no step-up). Trigger Event: At any time, upon either the Solo CET1 Ratio or the Consolidated CET1 Ratio falling below 5.125%. Documentation: Preliminary Prospectus dated 28 October 2024, final Prospectus approval expected on [•] November 2024.

IPTs: 6.500% semi-annual yield to First Reset Date

• The trade marks a rare visit to the euro AT1 market by Belfius Bank which has not sold paper in this format since back in Jan 2018 which came via a very well received EUR500m PNC7.25 line.
• With that, leads have highlighted a number of much more recent comps including a EUR750m PNC7 line from KBC Group which priced on 10th Sep into a EUR1.4bn book (6.25% PNC 9/31) that was spotted at 6.015% to call.
• Notably, today’s sale will take euro-denominated YTD AT1 supply to EUR16.65bn and close to the annual record of EUR16.94bn set back in 2020.
• Books were above EUR1.4bn by late morning.

RBC offer low beta option via 2yr senior eur FRN

** ROYAL BANK OF CANADA has mandated CACIB, Commerzbank, ING, RBCCM (B&D) as Bookrunners for a EUR BMARK 4 November 2026 Regulation S Bearer Notes, TEFRA D applicable, not Rule 144a eligible Senior Unsecured Floating Rate Notes, expected ratings A1 / A / AA- (St/St/St Moody's/S&P/Fitch). Pay date 4 November.

IPTs: 3mE+60bps area

• In terms of floating euro paper, RBC most recently brought a EUR1bn green 4NC3 in June at 3mE+60 courtesy of EUR1.4bn in orders, spotted in the comps list below at DM +57.
• Otherwise, bullet comps with a nearby maturity comprise an ex-3yr green from slightly lower rated CIBC (Jan 2027) which priced in January that was spotted at DM +43.
• RBC hit the sterling market last week, raising GBP500m via a 6NC5 senior bail-in note which landed 15bps inside UKT + 115 area IPTs into a final book of GBP815m.
• Books were last touted at EUR2.bn with the final pricing shaved to 3m+40.

NatWest Markets Plc working 3yr OpCo senior

** NatWest Markets Plc has mandated BofA Securities, Deutsche Bank, NatWest Markets (B&D), Santander, Societe Generale as Joint Lead Managers for a EUR Benchmark 4 November 2027 Senior, unsecured, unsubordinated issue, expected ratings A1/A/A+ (Moody’s / S&P / Fitch). Pay date 4 November.

IPTs: MS+85bps area

• Natwest last hit the fixed rate senior market in January this year as part of a two-tranche exercise comprising a EUR750m 5yr and EUR1.75bn 2yr FRN.
• In terms of neighbouring comps, leads have highlighted the issuer’s prior 5yr lines sold in Jan 2023 (4.25% 1/28) Feb 2022 (1.375% 3/27).
• The longer of those lines was spotted at i+57, suggesting fair value on the new Nov 2027 line in the context of m/s +low 50s.
• Books were last touted at EUR2bn+.

€€€ NatWest Markets Plc OpCo Senior 3yr FXD – Indicative Pre-Announce Comps €€€

Barclays PLC stick with 11NC10 script for latest senior HoldCo

** Barclays PLC has mandated Barclays as Bookrunner for a EUR Benchmark 11NC10 (due 31 January 2036) Reg S, Cat 2, Registered Senior, Unsecured, Unsubordinated issue, expected ratings Moody’s: Baa1, S&P: BBB+, Fitch: A. Pay date 04 November. Optional Redemption Dates: Any date from (and including) the Settlement Date to (and including) the Reset Date. Reset Date: 31 January 2035. Initial Coupon: Fixed, Annual, Act/Act (ICMA), [•]% per annum payable annually in arrear from (and including) the Settlement Date to (but excluding) the Reset Date, starting on 31 January 2026 (long first coupon). Reset Coupon: If the Notes are not redeemed on or prior to the Reset Date, the Coupon will reset to a fixed rate per annum equal to the 1-year Euro Mid-Swap Rate (Mid-Swap Floating Leg Benchmark Rate: EURIBOR) plus a Margin (as further described in the Documentation).

IPTs: MS+180/185bps

• The issuer’s most recent sale of senior Holdco paper was conducted in April 2024 when pricing a 2-part EUR750m 4NC3 FRN and a EUR1bn 11NC10 transaction.
• The latter (BACR 4.347% 5/35-34) was a big hit with investors who submitted EUR5.6bn in orders and was spotted on screens Monday morning at i+150.
• Referencing that deal and allowing for the additional duration would suggest fair value on the new 11NC10 line is in the region of m/s +mid 150s, a level that was rubber stamped by sources away from the deal.
• Books topped EUR3bn at the latest update

SEB boosting USD AT1 supply with new PNC7 AT1

Skandinaviska Enskilda Banken AB (publ), rated Aa3 / A+ / AA- (Positive / Stable / Stable), has mandated BNP PARIBAS, BofA Securities, Goldman Sachs Bank Europe SE, J.P. Morgan, SEB, UBS Investment Bank as Joint Lead Managers for a USD500m (WNG) Reg S PerpNC7 AT1 Additional Tier 1 Convertible Notes, expected ratings Baa3 / BBB+. Pay date 4 November. First Reset Date 4 November 2031. Interest [·]%, Fixed until the First Reset Date, reset every 5 years thereafter (non-step) to the sum of the relevant 5 Year USD SOFR Mid-Swap Rate and [·] bps (the Reset Margin), payable semi-annually in arrear on the outstanding principal amount, subject to Interest Cancellation. Trigger Event Either the CET1 Ratio of the Bank is less than 5.125% or the CET1 Ratio of the SEB Group (as defined in the Information Memorandum) is less than 8%. Loss Absorption Mechanism If a Trigger Event occurs, the Notes will be converted automatically (and without any requirement for the consent or approval of Holders) into Conversion Shares at the Conversion Price on the date of such Trigger Event.

IPTs: 7.25% area (S/A)

• Today’s sale marks the issuer’s first sale of dollar AT1 paper since bringing a USD500m PNC5.5 line in May 2022 (6.875% PNC 6/27)
• It will lift total YTD supply of AT1 paper in dollars to USD28.73bn.
• That’s way above 2023’s full-year tally of USD17.55bn but is still some way short of the annual record of USD28.73bn set in 2021, according to IGM records

Performance tracker of recent EUR benchmark deals

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