CEB issues a USD 1 billion five-year benchmark
6 February 2018
PARIS - On Tuesday 6th February 2018, Council of Europe Development Bank (CEB), rated Aa1/AA+/AA+ (stable/positive/stable), priced a US$1bn “no-grow” 5-year Global benchmark, joint lead managed by Goldman Sachs, HSBC, Nomura and TD Securities. The transaction represents CEB’s first US$ Global outing of 2018, following a successful outing in EUR. The new benchmark extends CEB’s USD curve, offering investors a new liquid pricing reference.
Following a quiet week in the SSA Primary Markets with the FOMC meeting on Wednesday 31st January and NFP release on Friday 2nd February, CEB announced the mandate for a US$1bn no-grow 5-year Global early on Monday 5th to secure an issuance window, in the expectation of competing supply ahead of the Chinese New Year Holidays.
Initial Price Thoughts (“IPTs”) of mid-swaps +14bps area were released at 12:30pm London time with the simultaneous collection of Indications of Interest (“IOIs”). Despite significant volatility in the broader macro markets, the transaction garnered demand from the outset, especially from the Bank Treasury community, underscoring CEB’s status as a safe haven asset for global investors.
With Indications of Interest standing in excess of US$1.9bn (excluding JLM interest), the syndicate tightened Price Guidance to mid-swaps +12bps area at Books Open on Tuesday 6th. Orderbook momentum continued during the European morning, supported by further high quality central bank orders, and it was announced at 9.25hrs London that European Books would go subject at 9.45hrs London. Soon thereafter, the syndicate further revised the final spread to midswaps +11bps, with the demand in excess of US$2.3bn for the US$1bn no-grow transaction.
The new CEB 5-year Global was priced at 15:45hrs London at mid-swaps +11bps, equating to a +21.8bps spread vs the 2.375% UST maturing January 2023.
With very little price sensitivity in the orderbook despite the 3bps spread tightening, CEB garnered demand from a wide range of global investors, with over 65 separate orders. The quality of the transaction was underscored by the high proportion of Bank Treasury (42.2%) and Central Bank (41.4%) tickets.
Technical details on the transaction are available here.
Set up in 1956, the CEB (Council of Europe Development Bank) has 41 member states. Twenty-two Central, Eastern and South Eastern European countries, forming the Bank's target countries, are listed among the member states. As a major instrument of the policy of solidarity in Europe, the Bank finances social projects by making available resources raised in conditions reflecting the quality of its rating (Aa1 with Moody's, outlook stable, AA+ with Standard & Poor's, outlook positive and AA+ with Fitch Ratings, outlook stable). It thus grants loans to its member states, and to financial institutions and local authorities in its member states for the financing of projects in the social sector, in accordance with its Articles of Agreement.