November 14, 2017 / 3:50 PM / 10 days ago

Social bonds all the rage in SSA sector

LONDON, Nov 14 (IFR) - Investors are lapping up Social bonds from Bayerische Landesbodenkreditanstalt, African Development Bank and Cassa Depositi e Prestiti.

BayernLabo tightened its €500m no-grow 10-year by 5bp during execution - pricing at 14bp through mid-swaps - via ABN AMRO, BayernLB, DZ Bank, Erste Group and Nord/LB.

“That’s a big move, although they could’ve started a bit too cheap,” said a banker away from the deal.

“We estimated fair value at less 10bp or 9bp so this is pricing through their curve, or rather the one dot they have. It was a bit difficult to price off one outstanding bond, so we also looked at covered bonds and German states,” said a lead.

BayernLabo’s €500m Nov 2026s were trading around 9bp through swaps, according to Thomson Reuters data.

WL Bank’s €750m Aug 2027 covered was quoted at less 18bp and a Baden-Wuerttemberg €750m Feb 2027 at less 20bp.

Books were above €2bn, including €350m from the leads.

AfDB meanwhile only moved to a final 14bp through mid-swaps from yesterday’s IPTs of the low teens through.

Books were last seen over €1.25bn, but that masks a very slow start with IoIs overnight languishing at some €300m.

Leads Credit Agricole, Goldman Sachs and HSBC initially marketed an undefined benchmark amount before refining that to a benchmark-minimum no-grow €500m first thing this morning.

A banker on the SEC-exempt seven-year Global said AfDB issuing its inaugural Social bond is “a good diversification exercise”.

“We’re seeing extremely good momentum. Guidance at minus 12bp area was a bit of a concession versus the curve, but not a lot,” he said.

AfDB’s €1.15bn Jan 2024s were trading yesterday as tight as swaps less 13.5bp and its €750m Oct 2026s at minus 3.5bp.

CDP also proved that Social issues are all the rage, drawing orders in excess of €2.25bn (€110m JLM).

Leads Barclays, Credit Agricole, Citigroup, HSBC, Societe Generale and UniCredit set the spread for the €500m no-grow five-year at 57bp over mid-swaps, having started marketing at high 60s.

It is CDP’s second (conventional) issue of the year, having raised €1bn through a seven-year in June.

“More and more accounts are focusing on Social bonds and we’re seeing dedicated pockets for this sort of product. We’re still waiting for the turn of the tide,” said a banker away from the deal. (Reporting by Melissa Song Loong; editing by Alex Chambers, Julian Baker)

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