EUROBONDS: Spanish Mid-Size Bank Tests Market, Indexes Softer
First Published Friday, 2nd March 2012 02:27 pm - © 2012 Dow Jones
By Serena Ruffoni
Of Dow Jones NEWSWIRES
LONDON -(Dow Jones)- Another mid-sized peripheral lender, Banco Popular Espanol SA (POP.MC), is testing the market with a senior unsecured bond offering, while secondary markets are weaker as investors take profit on the recent tightening in credit default swap spreads.
Banco Popular Espanol is exploiting liquidity provided by the European Central Bank in its second three-year loan operation this week. The ECB has pumped EUR1 trillion into financial markets to ease peripheral government bond yields and bank funding strains.
The first mid-sized, domestic bank based in the euro-periphery to try a senior unsecured issue was Italy's Monte dei Paschi di Siena (BMPS.IT) on Wednesday, just after the LTRO results release.
Elsewhere, the high-yield continues to be busy with a so-called "drive by" offering from German cement maker HeidelbergCement (HEI.XE). The issue priced at par to yield 4%. A "drive by" bond issue is a rapid, unexpected bond issue, normally executed in response to proven investor demand. Normally orders are collected and the issue priced a relatively short time after it is announced.
Switzerland-based airline catering group Gategroup Holding AG (GATE.EB) priced a EUR350 million 6.75% seven-year bond at par, an investor on the deal said.
U.K.-based lead recycler Eco-Bat will price a planned EUR300 million five-year bond. Ratings are B+ from Standard & Poor's and B1 from Moody's Investors Service Inc.
Investment firm Intermediate Capital Group PLC (ICP.LN) has set price guidance on its sterling-denominated, five-year bond in the area of 8%, one of the banks running the deal said Friday.
The issuer, which invests predominantly on junior loans called "mezzanine", is rated BBB- by Standard & Poor's and Fitch Ratings, one notch above junk status.
The bond is subject to a 125-basis-point step-up coupon if ICG's debt rating falls below investment grade with either ratings company.
Dutch agency borrower Nederlandse Waterschapsbank NV has priced its EUR500 million, 15-year bond.
Credit default swaps indexes were slightly wider Friday, as investors took profits on the previous day's spread-tightening.
At around 1330 GMT, the SovX Western Europe index, which investors can use to buy or sell credit default swaps on a basket of 15 sovereign borrowers, was 10 basis points wider at 345/351 basis points, according to data provider Markit.
Credit default swaps are derivatives that function like a default insurance contract for debt. If a borrower defaults, sellers compensate buyers.
The iTraxx Europe index, which comprises 125 high-grade borrowers, 25 of which are banks and insurers, was three basis points wider at 129/130 basis points. The Crossover index of 40 mostly sub-investment-grade European corporate borrowers was nine basis points wider at 566/569 basis points.
-By Serena Ruffoni, Dow Jones Newswires; +44 (0) 207 842 9349; firstname.lastname@example.org (Sarka Halas and Ben Edwards contributed to this report)