Jyske ‘home free’ after return with Eu500m senior

Nov 15th, 2012

Denmark’s Jyske Bank sold its first senior unsecured bond in the public markets since May 2011 on Tuesday, a Eu500m two-and-a-half year floating rate note that completes the Danish bank’s prefunding of redemptions due in 2013.

“We aim at refinancing maturities one year ahead of their actual redemption, and with this issue we have basically completed all our refinancing for 2013 redemptions,” said Merete Poller Novak, head of strategic funding and debt investor relations at Jyske Bank. “We have approximately Dkr10bn coming up for redemption and all of that has been refinanced via this public benchmark, the BRF funding that we have done, and private placements, so we are home free.

“We have also stretched out our public curve to 2015, having data points in 2013, 2014 and 2015 now,” she added. “With a very limited funding gap, and the BRFkredit joint covered bond agreement, we don’t have a need for long dated EMTNs at the moment, but I still think it is very important to maintain a little curve to underpin access to the capital markets.”

Novak said that the issuer launched the deal now to take advantage of market conditions and to avoid the likely January rush.

“There has been for some time an attractive market window and given that there has been so little competing supply we were convinced that it was better to go out into the market now than to wait until January when we will probably see a lot of banks starting up again,” she said.

“I am also pleased that we had the flexibility to wait until now to issue given how much spreads have tightened over the last three to six months,” she added.

Lead managers BNP Paribas, JP Morgan, LBBW and Nordea Markets priced the May 2015 FRN at three month Euribor plus 117bp. They had gone out with initial price thoughts of Euribor plus 120bp-125bp on Tuesday morning and then officially opened books at 1115 London time with official guidance of the Euribor plus 120bp area.

The deal’s size was capped at Eu500m from the outset and the syndicate official said that the book built strongly and quickly, totalling almost Eu800m and comprising close to 100 orders. A syndicate official at one of the leads said that that there was no spread sensitivity in the order book, which he described as very granular.

“It was not the normal trade to do,” said Novak. “Most banks do either 18 month or two year floaters, or do fixed rate three years and longer with investors looking for such paper for yield, so we are very pleased with the Eu800m book and the pricing for our 2.5 year FRN.”

Nordic investors took 43% of the bonds, Germany and Austria 22%, France 10%, the UK/Ireland 10%, the Benelux 5%, southern Europe 4%, Switzerland 3%, and others 3%. Banks were allocated 74%, funds 18%, insurance companies 6%, central banks and official institutions 1%, and corporates 1%.

Finland’s Aktia Bank is holding an investor presentation in Helsinki next week as well as an investor call ahead of a potential senior unsecured transaction, with Nordea Bank and UniCredit arranging the exercise.

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