FIG SNAPSHOT: Issuers target intermediate part of senior curve as pace slows

Compared to recent sessions, screens are comparatively sparse in the non-covered FIG space on Wednesday where a brace of issuers are set to price new euro deals, both in the intermediate part of the curve for EUR500m no-grow sizes. Both are coming in senior preferred format too in the form of Novo Banco (6NC5) and Länsförsäkringar Bank AB (5yr).

Elsewhere, in USD, Aareal Bank AG is emerging from the pipeline with its planned sale of Regs PNC5.5 AT1 notes for an expected size of USD400m.

The more measured pace being seen today could reflect that issuers were evidently keen to lock in funding ahead of today’s key US CPI update, or potentially that a degree of gravity is starting to catch up with the primary market to follow a very busy run in the opening part of the year.

Recall that a larger than-expected EUR19.25bn of new euro paper priced last week in the non-covered space, followed by a further EUR8.25bn in the opening two days of this week, making a significant dent in the EUR14.5bn average guess.

As to whether any serious indigestion is building is probably too early to say and in the meantime, the experience of Tuesday’s issuers suggests that demand is sufficiently deep for some deals to price through existing curves.

Indeed, achieving the keenest price of Tuesday’s quartet was Banco BPM where its EUR500m no grow 5yr senior pref landed around 5bps inside the estimated fair value level, following which the deal is bid around reoffer on Wednesday morning ahead of today's US inflation update and flurry of US bank earnings.

Snapshot of Wednesday’s live EUR deals

Novo Banco refresh senior pref curve with new 6nc5 line

** Novo Banco, S.A., rated Baa2 (pos) / BBB (stab) / BBB (stab) by Moody’s / Fitch / DBRS, has mandated BofA Securities, Deutsche Bank (B&D), J.P. Morgan, Societe Generale and UBS Investment Bank as Joint Bookrunners for a EUR 500,000,000 (WNG) Reg S, dematerialised book-entry and registered form Fixed/Floating Rate Callable Senior Preferred Notes due 22 January 2031 (6 years), exp ratings Baa2 / BBB by Moody’s / Fitch. Pay date 22 January. Optional Redemption Date / Reset Date 22 January 2030 (5 years).

IPTs MS+135bps area

• The Portuguese lender's most recent SP sale was held in September last year via a EUR500m 4.5nc3.5 line which priced at m/s +100 into a comparatively measured EUR1.2bn final book.
• Leads spotted that line at i+89 in the comps lists (below) with an extension for the additional duration suggesting a theoretical fair value level in the context of m/s +100.

LF Bank sticks with 5yr script for senior return

** Länsförsäkringar Bank AB (publ), rated A1 (Stable) / A (Positive) (Moody’s / S&P), has mandated ABN AMRO(B&D), Barclays, Bofa Securities, Deutsche Bank, SEB, Societe Generale as Joint Bookrunners for a €500m (WNG) Reg S only, Bearer form, NGN Unsecured and unsubordinated, Senior Preferred Notes due 22 January 2030, exp ratings A1 / A (Moody’s / S&P). Pay date 22 January.

IPTs MS+115bps

• LF Bank’s last SP sale was held in Jan last 2024, also a 5yr, in the form of EUR500m line maturing in Jan 2029.
• That deal proved to be a relatively slow burner in terms of demand where final orders finished up at EUR850m at the m/s +125 reoffer level, spotted in the comps list (below) at i+88 on the bid side.
• Offering some encouragement was the experience of SBAB on Tuesday where its EUR500m senior pref green amassed a peak book of EUR2.35bn (final EUR1.65bn) with leads able to slash 30bp off m/s +105a IPTs, to land the deal flat or just inside the estimated fair value level.

Aareal Bank offering yield via USD400m exp PerpNC5.5 AT1

** Aareal Bank AG has mandated Morgan Stanley as Global Coordinator and BofA Securities, Citi, Goldman Sachs Bank Europe SE, Morgan Stanley and UBS Investment Bank as Joint Lead Managers for a USD-denominated, RegS Bearer, perpetual NC July 2030 Additional Tier 1 400m exp. transaction (the “Notes”). Pay date 22 January. Aareal Bank AG has also announced an any-and-all cash tender offer (the “Tender Offer”) on its outstanding EUR 300,000,000 Fixed to Reset Rate Additional Tier 1 Notes of 2014 next callable on 30 April 2025 (ISIN: DE000A1TNDK2). See details here

IPTs 10% area (Coupon, annually)

New to the pipeline

** In relation to the voluntary public tender offer for Spar Nord Bank A/S by Nykredit Realkredit A/S, Nykredit Realkredit A/S (rated A+/A+ by S&P/Fitch - both stable) has mandated BNP Paribas, Citi, Erste Group, Goldman Sachs International, ING, J.P. Morgan, Natixis, and Nykredit Bank as Joint Lead Managers to arrange a series of fixed income investor calls on Wednesday 15th January. CEO Michael Rasmussen and CRO Anders Jensen will be available. J.P. Morgan will be coordinating roadshow logistics. A EUR benchmark 10.25NC5.25 Tier 2, a EUR benchmark 2yr FRN Senior Non-Preferred and a 5.5yr Fixed Rate Senior Non-Preferred, all in RegS format, may follow subject to market conditions. The Tier 2 notes are expected to be rated BBB/A- by S&P/Fitch and the Senior Non-Preferred notes are expected to be rated BBB+/A+ by S&P/Fitch. Comps here

Already in the pipeline

** Nippon Life Insurance Company (“Nippon Life”, Ticker: NIPLIF), the largest mutual life insurance company in Japan based on premium income and asset size, rated A1 (stable) by Moody's and A+ (stable) by S&P, has mandated J.P. Morgan, Barclays, BNP PARIBAS, Citigroup, HSBC, BofA and Morgan Stanley to arrange a series of telephonic investor calls across Asia and Europe (14-15 Jan). An offering of inaugural EUR 500mn (WNG) RegS Registered 30NC10 step-up callable subordinated notes is expected to follow, subject to market conditions. The notes are expected to be rated A3 by Moody’s and A- by S&P. Comps here

Performance tracker of recent EUR benchmark deals

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