Handelsbanken gets $1.4bn on ‘good day’ in US

Jun 12th, 2014

Svenska Handelsbanken priced a $1.4bn (Eu1bn, Skr9.4bn) dual tranche five year senior unsecured transaction on Tuesday, raising funding at a much lower cost than that available in euros to highlight a large arbitrage in play between the markets, according to a banker away from the leads.

HandelsbankenFlickr_croppedMore than $3bn of orders were placed for the deal, with demand skewed towards a five year fixed rate tranche. This was sized at $1bn and priced at 57bp over Treasuries on the back of $2.6bn of demand. It was first marketed with price whispers of the mid-60s over before guidance was set at the 60bp over area.

Alex Sönnerberg, Nordic FIG DCM origination at Crédit Agricole CIB, put the euro mid-swaps equivalent level on Handelsbanken’s fixed rate tranche at 28bp over, and noted how favourably this compares with where the bank would fund in euros.

“There is clearly a big arbitrage between the markets and that is despite Pohjola pricing the tightest five year senior year-to-date in euros,” he said.

Handelsbanken’s deal also included a five year floating rate note (FRN), for which orders worth around $750m were placed. It was sized at $400m and priced at 49bp over three month dollar Libor.

A syndicate official at one of the leads — Bank of America Merrill Lynch, Goldman Sachs, JP Morgan and Royal Bank of Scotland — said that the deals came with a new issue concession of around 4bp, with a 2.5% January 2019 Handelsbanken the main reference.

“It was a pretty big book for these kinds of deals and a good day in the market,” he said.

The fixed rate tranche was trading around 55bp-56bp over today (Thursday), he added.

More than 100 investors participated in the transaction, with real money accounts dominating.

US accounts took 72.5%, Asia-Pacific 17%, the UK 6%, other Europe 4.4%, and the rest of the world 0.5%. Fund managers were allocated 56%, governments and central banks 21%, insurance companies and pension funds 11%, corporates 8%, banks and private banks 2%, and hedge funds 2%.

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