The FINANCIAL — The European Bank for Reconstruction and Development (EBRD) has successfully launched a US$1.25 billion five-year global bond issue, the Bank’s second US$ benchmark deal since the start of the year.
The EBRD reacted to a very strong backdrop in the high grade SSA sector to price one of the tightest 5 year transactions of 2017 so far.
The transaction achieved excellent traction and interest from the global investor base which enabled it to be priced with a minimal concession to secondaries, according to EBRD.
Demand for the deal came from a variety of high quality investors and when the spread was set at MS+17 the final order book was over US$1.6 billion.
The transaction mandate was announced London morning on Monday the 27th of February at 9:00 am London time, with Initial Pricing Thoughts of MS+18 basis points area announced at the US open at 7.30 Eastern Time. As the Indications of Interest gathered interest throughout the day in the US and at the London close IoIs reached US$ 1.1 billion ready for when books opened formally at 07:55 London AM. The order book kept up a strong pace of growth throughout the morning enabling the spread to be set at 10:30am London time at MS+17 basis points, one basis point tighter than Initial Pricing Thoughts.
The lion’s share of the demand originated from Central Banks/Official institutions and Banks with 49 per cent and 37 per cent respectively. Geographically there was a very diverse and well distributed demand with Asia, Europe, Middle East, Africa and the Americas taking 36 per cent, 36 per cent, and 28 per cent respectively. In total 48 investors participated in the transaction.
This transaction was joint-lead managed by HSBC, J.P Morgan, Scotiabank and Toronto Dominion.
The bonds were issued at a price of 99.887 per cent and pay a coupon of 2.125 per cent per annum, through semi-annual payments. This gives investors a yield of 2.149 per cent (semi-annual), equivalent to a spread of +29.5bp above the underlying US Treasury bond.