FIG SNAPSHOT: HSBC alone but pipeline builds

In terms of live deals, the new week is getting off to a measured start in the FIG space where HSBC Holdings is alone with a 2-part offering of senior holdco notes comprising 6NC5 and 11NC10 lines.

That marks the first installment in this week's anticipated supply which is expected to total EUR7bn, according to the average estimate in our poll conducted on Friday.

The pipeline has seen several new additions though where a relatively eclectic mix includes an Icelandic USD AT1 mandate for Arion Bank, a EUR benchmark SNP for CEE lender Bank Polska Kasa Opieki S.A and an inaugural green senior pref for Eurobank.

The latter comes as the cost of default on the Greek sovereign remains on a downward trajectory, as does the yield spread of Greek debt over the core, after Friday’s move by Moody's to raise its outlook on the government of Greece to positive from stable while maintaining its long-term issuer and senior unsecured debt ratings at Ba1.

The outlook revision reflects the growing probability of a sustained improvement in the health of the country's banking sector while the ratings affirmation is based on the significant rise in structural reform implementation and fiscal consolidation.

Notably, the most oversubscribed deal of last week in the FIG space came from Greek lender Piraeus Financial Holdings S.A where its EUR650m 11NC6 Tier 2 was covered by 4.15x at its m/s +315 reoffer. That deal also stood out from the pack in that all orders stayed on board through to final pricing,

Looking more broadly and overall volume slowed last week to EUR6.625bn (from a prior EUR12.12bn), comfortably short of the average EUR8.5bn guess. The covered market struck a complete blank, set against the backdrop of an ECB meeting and also as participants gathered for the ECBC in Porto.

Most metrics spoke of slightly softer conditions in the non-covered space last week where the average cover fell to 2.36x from 3.52x prior, its lowest since mid-June.

The average NIC edged a little higher (based on deals where this was sufficiently transparent to ascertain) while order book attrition was also on the rise. Based on a simple comparison of total orders at peak vs final books, the total value of combined orders dropped by 25.3% (prior week 18.4%)

HSBC Holdings go with 2-part for senior holdco refresh

** HSBC Holdings plc, rating A3 / A- / A+ (Stable / Stable / Stable) (M / S / F), has mandated HSBC as Sole Global Coordinator and HSBC, BBVA, CIBC Capital Markets, ING, KBC, Natixis, Nordea, Swedbank, TD Securities as Joint Lead Managers for a EUR two-part Senior, Unsecured New Global Note (NGN), Reg S Category 2, in bearer form, TEFRA D with EUR 6NC5 (Maturity Date: 25 September 2030, Par Call Date: 25 September 2029) & EUR 11NC10 (Maturity Date: 25 September 2035, Par Call Date: 25 September 2034) tranches, exp ratings A3 / A- / A+ (M / S / F). Pay date 25 September.

IPTs:

EUR bmk 6NC5 @ MS+145bp area

EUR bmk 11NC10 @ MS+175bp area

• This marks HSBC’s second Holdco euro sale of 2024 to follow a EUR1.25bn 5NC4 in May (3.755% 5/29-28) into a EUR2.2bn book
• Prior to that, the UK lender issued three lines in 2023 comprising a EUR1.75bn 10NC9 line in May (4.856% 5/33-32) and a 2-part sale of EUR1.50bn 5NC4 (4.752% 3/28-27) & EUR1.25bn 9NC8 notes in March (4.787% 3/32-31).
• Based on comps supplied, fv looks to be in the context of m/s +115 area on the new 6NC5 line and at m/s +145 area on the new 11NC10, implying starting NICs of around 30bps on each tranche. Bankers off the deal broadly agreed.
• Combined orders at the first update topped EUR4bn (evenly split) before spreads were set at m/s +115 and m/s +145 on respective orders of EUR3.3bn and EUR3.5bn.
• For context last week’s issuers cut pricing by an average of 33.6bps during execution although that average fell to 30.1bps when excluding a trio of AT1 deals.

Comps:

New in the pipeline

** Eurobank SA (Ticker: EUROB) has mandated HSBC as Sole Green Structurer and BNP Paribas, BofA Securities, Commerzbank, Goldman Sachs Bank Europe SE, HSBC and Nomura as Joint Bookrunners for its upcoming Inaugural Green EUR Benchmark 6NC5 RegS Bearer Fixed Rate Reset Senior Preferred Notes. The net proceeds from the issue of the Notes will be used to finance or refinance a portfolio of Green Eligible Projects selected in accordance with the use of proceeds criteria and selection process as described in the Issuer’s Green Bond Framework available here. Comps here

** ING Bank A.S. (100% owned by ING Group), has mandated Emirates NBD Capital and ING as Joint Bookrunners, to arrange a series of fixed income investor meetings commencing 16-Sep. An inaugural 10.25NC5.25 fixed rate resettable USD-denominated Basel III compliant Tier 2 Reg S only sub-benchmark bond issuance will follow, subject to market conditions. The notes are expected to be rated B+ by Fitch. The issuer has received an expression of interest from a Multilateral Development Bank, subject to certain conditions precedent.

** Bank Polska Kasa Opieki S.A. (Bank Pekao, Ticker: PEOPW), rated A2 (stable) by Moody’s, A- (stable) by S&P, BBB (stable) by Fitch, one of the largest financial institutions in the CEE region and the second largest universal bank by total assets in Poland (PLN 316 billion as of H1 2024), has mandated Bank Pekao, BNP Paribas, BofA Securities, Citi and J.P. Morgan as Joint Lead Managers to arrange a series of fixed income investor calls commencing 16-Sep. A pre-recorded investor presentation has been made available. A EUR Benchmark Reg S, Senior Non-Preferred MREL-eligible bearer bond offering with a 6NC5 maturity is expected to follow, subject to market conditions. The Notes are expected to be rated BBB by S&P and issued under the EUR 5bn EMTN Programme

** Arion Bank hf. (Ticker: ARION; Country: IC) rated A3 (stable outlook) by Moody’s, has mandated BofA Securities, Morgan Stanley and UBS Investment Bank as Joint Lead Managers to arrange a series of fixed income investor calls commencing today. An investor presentation is also available on Roadshow Radar. A USD 125m no-grow RegS PerpNC5.5 (reset Mar-30) Additional Tier 1 capital transaction is expected to follow in the near future, subject to market conditions. The notes will feature principal loss absorption in the form of equity conversion, based on a 5.125% Common Equity Tier 1 Capital Ratio ("CET1") trigger at Bank and/or Group level.

Performance tracker of recent EUR benchmark deals

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