¥91.2bn Samurai puts Nordea at tight end of Japanese market

Nordea Bank positioned itself as the tightest European FIG credit in the Samurai market yesterday (Wednesday), pricing a ¥91.2bn (Eu693m, Skr5.96bn) senior unsecured issue inside Rabobank.

According to a banker at one of the leads — Daiwa, JP Morgan, Mizuho and Nomura — the Swedish issuer had been targeting a level inside its Dutch counterpart given Rabobank’s standing in the Japanese market.

“For all the Japanese investors, Rabobank is the benchmark for European FIG issuers,” he said. “This is the first time we have ever managed to price another European FIG deal through Rabobank.”

Nordea’s deal was split into four tranches: ¥28.1bn three and ¥48.8bn five year fixed rate tranches priced at 8bp and 11bp over yen swaps, respectively, and ¥12.2bn three and ¥2.1bn five year floating rate pieces priced at 18bp and 21bp over. According to the lead banker, the biggest differential between Nordea’s and Rabobank’s levels was in the five year tranche, where Rabobank had come at 14bp over.

He said that, after a debut ¥120bn deal in June 2012, Nordea on this occasion had prioritised pricing over size, and was therefore pleasantly surprised to be able to achieve a ¥91.2bn total size inside Rabobank.

The levels achieved on each tranche were at the tight end of price ranges released when books were opened last week, with the wider end of each range being on a par with the levels Rabobank had priced at. The lead banker said that it was made clear to the investors that pricing at the tighter end was being targeted, leaving only upside versus Rabobank for Nordea.

However, unlike the Dutch bank, Nordea did not achieve pricing on a par with that available in euros, where it trades further inside Rabobank, he added. The pricing on the five year tranche was equivalent to around 59bp over mid-swaps in euros, whereas a new five year euro deal would come in the high 40s, he suggested.

He said that it nevertheless makes sense for Nordea and other issuers to tap the Samurai market when arbitrage may not be available, to maintain relationships with investors. He added that some of these investors are also buyers in euros, dollars and other currencies, and that the issuer would want to meet their needs even if it cost a few basis points.

“Quite a few of the euro issuers have yen assets,” he added, “so even if the pricing is wider, it may make sense to fund the assets locally.”

The banker said that other European issuers are getting documentation in place for Samurai issuance in the near term so further supply is possible.

“However, the Nordics are spoilt for choice,” he added, “so that could change should the basis swap widen significantly.”