The expectation of a reduction in official rates by the ECB, good news for most market players, also means that i returns of the bonds will go reducing and therefore the Investors they try to put as much hay on the farm as they can to ensure good payouts for a few years. The downside, a little less understandable, is that the issuers, also aware that rates will fall, are certainly collecting funds with full hands thanks tohuge question, but paying a hefty price for them. Evidently the returns they pay to investors are still lower than the rates they would pay to borrow from the banks and after all they don't have much other choice given that in the next 2-3 years many issues will mature and need to be refinanced.
Between yesterday and today 5 new bonds
Every day new broadcasters present to institutional investors new offers. However, there is a lack of bonds aimed at retail investors. After the bonds issued yesterday by Mediobanca, Iren , Popular of Sondrio, today is the time of Unicredit ed Enel.
According to Santander, i European primary markets have recorded the second best start to the year, issuing 47 billion euros last week and reaching 89 billion euros year to date. “The majority of issues derive from financial companies, with 65 billion euros, -15% on an annual basis, while corporate companies issued 24 billion euros, +13% on an annual basis”, specifies the Algebris Investments team. “Demand has been high for new government, financial and corporate issues as central banks are expected to cut rates this year and investors seek high yields while they can.”
Unicredit launches a 7-year bond, Enel a 4,5 and 11-year sustainability-linked bond
Unicredit began the placement of a new one this morning senior bonds not preferred to 7 years. The first yield guidance is in the area of +210 bps on the midswap rate. For the bank, this is the second issue in the new year after the one placed last January 9th: a 10-year Tier 2 bond of 1 billion euros and fixed coupon, with maturity on 16 April 2034 and possibility of repayment after 5 years . The issue received orders for over 2,75 billion. The assignment for the placement was given to a consortium of banks made up of Unicredit (sole global coordinator) and BofA Securities, Credit Agricole Cib, HSBC, Ing, Imi-Intesa Sanpaolo, JP Morgan and Unicredit Bank (joint bookrunners).
Enel he instead chose a sustainability-linked double tranche bond: 4,5 and 11 years. In this case the first yield indications for the shorter tranche are in the 120 basis point area on the midswap, while for the longer tranche in the 170 basis point area on the same curve. Banca Akros, Barclays, Bbva, Bnpp, Bper Banca, Credit Agricole, Deutsche Bank, Gsbe, Se, Imi-Intesa Sanpaolo, Jpm, Natixis, Santander, Sg and Unicredit were in charge of the placement. In February 2023, Enel issued two bonds, 8 and 20 years, linked to sustainable objectives, with a yield to maturity of up to 4,7% and a coupon of 4,5%.
Yesterday Mediobanca, Popolare di Sondrio and Iren presented themselves
Mediobanca it was the first in 2024 to place a covered bond in Italy (yields 3,25%). Yesterday it returned to the market by placing a new Tier 2 subordinated bond, again aimed at institutional investors, with a duration of 10,25 years (maturing in April 2034) and a call option in April 2029, for a total amount of 300 million euros. “The bond attracted a broad and diversified demand on the market, allowing the yield to be revised initially from 305bps above the mid-swap rate to 275bps, we read in the Mediobanca press release. Over 1,5 billion euros in orders, a value more than 5 times the target amount. The new bond guarantees a coupon higher than the yield of the 10-year BTP (3,7%), equal to 5,25%, and allows, with the issue of the senior non-preferred in September 2023, the completion of 50% of the plan emissions foreseen by the bank's "One Brand One Culture" strategic plan to 2026. Over 70% came from foreign institutional investors with orders, in particular, from the United Kingdom, Ireland, Germany, Austria and Switzerland for 40%, and Italians (orders equal to 28%). BNP Paribas, Citi (B&D), Mediobanca itself, Santander and Société Générale were in charge of the operation.
Also the Banca Popolare di Sondrio has successfully placed a new covered bond with institutional investors for a benchmark amount of 500 million euros and a duration of 5,5 years (expires on 22 July 2029). The placement was carried out as part of the 5 billion guaranteed bank bond programme, backed entirely by residential mortgages. The operation, the bank underlines in a press release, "received good interest from the market, with requests reaching approximately 1 billion euros and final subscriptions distributed almost equally between foreign and domestic institutional investors" . As a result, the bond spread, initially equal to mid-swap +80 basis points, was reduced to 77 basis points above the mid-swap rate. The annual fixed coupon is equal to 3,25% with an issue price of the bond at 99,533%. The expected rating of the bond, which will be listed on the Luxembourg Stock Exchange, by the Fitch agency is AA. Intesa Sanpaolo (Imi Cib division) and Unicredit acted as global coordinators of the issue, while Intesa Sanpaolo (Imi Cib division), Lbbw, Raiffeisen Bank International, Santander, Societe Generale and Unicredit acted as joint bookrunners.
The multi-utility Iren has issued its fifth green bond with maturity 22 July 2032 and a maximum amount of 500 million euros (expected rating BBB for Fitch and BBB for S&P). It will allow it, says the company, to further strengthen the financial structure, improving liquidity ratios, and to finance and refinance projects that contribute to the realization of the sustainability objectives of the industrial plan. The bond literally sold like hotcakes with orders for over 4,7 billion, approximately 10 times the amount offered.
“This confirms the strong appreciation of institutional investors for the sustainable growth strategy undertaken by the group thanks to high quality demand, broad geographical diversification as well as significant participation of socially responsible investors,” we read in the press release. Iren. In more detail, the securities, which have a minimum denomination of 100 thousand euros, pay a gross annual coupon of 3,875% and were placed at an issue price of 99,514%. The effective gross rate of return to maturity is 3,946% corresponding to a yield of 135 basis points above the midswap rate. The placement was handled by Bank of America, Imi-Intesa Sanpaolo, Mediobanca, Société Générale and Unicredit as active bookrunners and by Bper Banca, Goldman Sachs, Morgan Stanley and Santander as other bookrunners.
Mundys prepares a 5-year sustainability-linked
Mundys, formerly Atlantia, controlled by Edizione, the Benetton family holding, will also make its debut on the capital market: it has mandated a pool of banks to organize a series of meetings with fixed income investors in view of the launch of a security sustainability-linked at 5 years. At the same time Mundys launched a tender offer on securities maturing on 3 February 2025, inviting the holders of the bonds to offer them for purchase for a maximum consideration of 150 million. The task was entrusted to BNP Paribas, Crédit Agricole, Imi-Intesa Sanpaolo and Mediobanca. This is the first sustainability-linked bond for Mundys (the last bond placed by the then Atlantia dates back to 2021) after the board of directors in December 2023 gave the green light to a bond issuance plan of up to a maximum of 1 billion. The new bonds will be linked to the achievement of sustainability performance objectives. Failure to achieve these objectives will result in the payment of a premium upon maturity of the new bonds.
