Handelsbanken nets hat-trick with senior Swissie after euro, sterling trades

Svenska Handelsbanken yesterday (Wednesday) priced the largest fixed rate senior unsecured deal in Swiss francs from an international FIG borrower since March 2011, a Sfr400m (Skr2.83bn, Eu325m) five year issue.

Handelsbanken’s Swiss franc foray was the Swedish issuer’s third funding deal in less than two weeks, after it re-opened the FIG flow primary market on Monday of last week (19 August) with a Eu1.25bn (Skr10.9bn) seven year senior unsecured deal and then last Thursday sold a £250m (Skr2.52bn) four year issue, also senior unsecured.

It yesterday sold the Sfr400m five year senior unsecured transaction via Credit Suisse and Deutsche Bank, who priced the deal at 20bp over mid-swaps, in line with guidance.

A syndicate official on the deal said it is Handelsbanken’s largest Swiss franc deal to date, and the largest fixed rate senior unsecured transaction by a foreign financial institution in the currency since March 2011.

“Over the past few weeks there’s been an increase in risk aversion linked to the sell-off in the emerging markets and then also Syria, with investors also thinking about the impact of higher rates,” he said. “There is clear demand for double-A and single-A assets, especially double-A.”

Handelsbanken is rated Aa3/AA-/AA-.

The syndicate official said that heavy issuance from various cantons in the domestic segment last week was a sign of the level of demand, and that Handelsbanken fit the bill as an issuer that was able to cater to such demand at relatively short notice. The deal was put together relatively quickly, he said.

ING Bank was also in the Swiss franc market yesterday, while BCI Chile and Commonwealth Bank of Australia were out with Swissies today.

In tapping the sterling market last Thursday with its £250m four year deal, Handelsbanken responded to demand from investors that had expressed an interest in supply from the issuer following its euro senior unsecured deal, according to a syndicate official at one of the leads — Goldman Sachs and RBC.

He noted that the sterling credit market has been heavily undersupplied this year and that there has been only one other FIG fixed rate deal in 2013, a long dated issue for Standard Chartered early in the year, with investors having built up cash balances and interested in investing in low beta assets. With new Bank of England governor Mark Carney having been in office for a few weeks already, investors were also more willing to get involved in the market, he said.

Handelsbanken’s deal was priced at 90bp over Gilts, in line with guidance of the 90bp over area, providing the issuer with competitive funding compared with other markets, according to the lead syndicate official.

The issuer is said to have made a saving versus the euro market.