January 3, 2017 / 2:42 PM / 7 months ago

BNP Paribas goes head to head with Credit Agricole

3 Min Read

LONDON, Jan 3 (IFR) - BNP Paribas and Credit Agricole will share the podium for issuing the first senior non-preferred bonds in US dollars after the former bypassed an outstanding mandate from its peer early on Tuesday morning.

BNPP swept up Asian orders for the seven-year note (Baa2/A-/A+/AH) before marketing in Europe and the US, turning the tables on Credit Agricole which unexpectedly opened that market in euros at the end of 2016. BNPP later added a euro tranche on the back of strong reverse enquiry out of Europe.

Credit Agricole, which priced the first of this new type of debt in mid-December, announced follow-up US dollar five and/or 10-year maturities (Baa2/BBB+/A) on December 27, opening books at the US open on Tuesday despite speculation that it might put the trade on hold.

"I'm sure Credit Agricole isn't happy about it," said one banker. The bank could not be immediately reached for comment.

Others said BNPP's strategy made sense. "They're doing it the right way; you don't need to reserve your slot, especially in dollars. They're picking a good day to get both deals done," said a second banker.

BNPP's euro and dollar deals looked to be roughly in line at IPTs, he said. The issuer started marketing the dollar tranche at Treasuries plus 170/175bp and the long six-year euro at swaps plus 105bp area.

BNP Paribas intends to print 30bn of the new-style senior debt by 2019, the largest volume among the French banks. The securities, which sit between outstanding preferred senior and Tier 2 debt, are designed to help banks comply with incoming rules demanding larger stacks of debt to absorb losses in a crisis.

"BNPP's strategy seems a bit more piecemeal than I'd expected given their target," said another syndicate official, who had expected the bank to offer multiple tranches.

The bank's euro 2.875% Sep 2023 preferred senior, just shorter than the new Oct 2023s, was bid at 44bp over swaps on Tuesday morning, according to Tradeweb.

Credit Agricole and Societe Generale paid between 30bp and 40bp over their traditional senior bonds for respective Dec 2026 and Apr 2022 trades, with 10bp-15bp new issue concessions on top.

The first two deals were well received, with investors placing more than 8.5bn in combined orders. Societe Generale's Apr 2022s are bid more than 5bp tighter than reoffer, at swaps plus 84.7bp, but Credit Agricole's Dec 2026s have widened to 123.4bp after pricing at 115bp.

The spread on BNPP's euro tranche fixed at swaps plus 92bp for a 1bn deal, but there was no book update available. (Reporting by Alice Gledhill, editing by Helene Durand, Julian Baker)

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