SMN €500m senior return boosted by rarity value

Jun 4th, 2016

SpareBank 1 SMN sold its first euro benchmark senior issue in two years on Wednesday, attracting over €1bn of demand for a €500m five year, which bankers said benefitted from strong demand for the rare issuer.

SpareBank 1 SMN sold its first euro benchmark senior unsecured issue in February 2013, a €500m five year, before following up with another deal of the same size and maturity in May 2014, but has since been absent from the market.

After announcing a mandate for a €500m five year issue on Tuesday afternoon, leads BNP Paribas, DZ, Danske and RBS launched the new issue on Wednesday morning with initial price thoughts of the 90bp-95bp area, before setting guidance at the 90bp area.

The spread was then fixed at 85bp, with the book closing at over €1bn, with more than 150 accounts participating.

“Ever since SMN started issuing euro benchmark senior bonds as part of its strategy, it has been clear it would not be the most frequent issuer – perhaps coming to the market once every couple of years,” said a syndicate official at one of the leads. “Hence, there was obviously some appetite for this rare deal.

“In some markets this can work to the contrary, meaning investors do not have readily available lines, but here we had over 150 accounts involved, so that was clearly not a problem.”

Bankers at and away from the leads said the deal offered a new issue premium in the high single-digits, based on the secondary curves of comparable Nordic issuers. They said this was in line with the premiums offered by comparable recent senior and subordinated deals.

“The progress made on the pricing formation and the order book clearly show a strong result,” said the lead syndicate official. “The issuer can be pleased with this outcome.”

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