Nykredit in Eu500m FRN refi to preserve ratios

Nov 28th, 2013

Nykredit Bank sold a Eu500m two-and-a-half year floating rate senior unsecured issue yesterday (Wednesday) to refinance a bond of the same size maturing in January, according to an official at the issuer, with recent FRN deals also encouraging the move.

The January 2016 FRN was priced at 53bp over three month Euribor, the tight end of guidance of the 55bp over area, with nearly Eu750m of orders placed for the issue.

Bank of America Merrill Lynch, JP Morgan and RBS were lead managers alongside Nykredit.

Henrik AndersenHenrik Andersen, head of treasury and financial institutions at Nykredit Bank, said that the deal was launched to refinance a Eu500m FRN maturing in January 2014, with the issuer wanting to secure the refinancing this side of the new year.

Tight spreads and strong market conditions also influenced the timing of the deal, with other recent FRN bank issuance an additional impetus to proceed with a transaction, he said.

Nordea Bank priced a Eu1bn three year senior unsecured note on Monday of last week (18 November), for example. That deal came at 33bp over three month Euribor.

Nykredit decided to refinance the January 2014 FRN in order to preserve its liquidity ratios, according to Andersen.

“Regulatory requirements like the LCR and NSFR in combination with rating requirements are forcing us to have strong liquidity ratios and we want to maintain these,” he told Nordic FIs & Covered.

The nature of the transaction as a refinancing move also explains the relatively short maturity, he added.

The 53bp over re-offer spread is “very satisfying” pricing, said Andersen.

“We think it is a fair price for us and investors,” he said. “The deal was oversubscribed by Eu225m, so we could tighten the spread from guidance.”

Denmark took 25%, other Nordics 25%, Germany, Austria, and Switzerland 19%, the UK 14%, the Benelux 7%, France 4%, and others 6%.

Banks were allocated 65%, asset managers 21%, agencies 6%, corporates 5%, and others 3%.

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