A pair of euro prints at the mid-to-long end of the curve scored most highly this quarter, on average over the five categories available for voting (pricing, structure/maturity, quality of the investor book, timing, and performance).
European Investment Bank and KfW each came close to a perfect score with deals that came in that tenor range.
A €5bn 0.25% October 2024 print from EIB scored an average of 9.8 over the five categories. The deal, which was priced by Barclays, Crédit Agricole, Goldman Sachs and LBBW on March 1, drew a book of close to €10bn.
The deal attracted plaudits at the time of pricing, with bankers away from the trade describing it as “barnstorming” and “crazy good”.
Voters rated it particularly highly for structure/maturity, timing, investor distribution, and performance.
Two weeks earlier KfW racked up another close to perfect performance in euros with a €5bn 0.625% February 2027 that achieved an average rating of 9.6. The deal’s strong reception was particularly impressive because the borrower had opted for a 10 year — a maturity that has not proved to be straightforward for every execution this year. KfW’s deal, however, clocked up a median score of 10 in the structure/maturity category.
Some of the praise from bankers away from the deal included “textbook” and “[they] knocked it out of the park”.
Bank of America Merrill Lynch, Barclays and UniCredit priced the deal on February 14 at 16bp through mid-swaps, having started the process with guidance of minus 14bp area. The book was in excess of €6.5bn when the leads fixed pricing at minus 16bp.
European Stability Mechanism (ESM) also achieved a high score in euros with a €3bn 0.7% March 2028 which was priced on March 7 at mid-swaps minus 1bp. The leads were Barclays, Crédit Agricole and Deutsche Bank.
BondMarker’s scores prove that the euro market has not been an easy one so far this year. The average deal score is lower, at 7.9 versus 8.5 in dollars. And deal scores in euros have been much more varied.
Two of the least popular deals to be scored on BondMarker so far this year came in the currency and from a pair of experienced supranationals : European Union’s €600m tap of its 0.75% April 2031s, which was priced on March 27 via BAML, Deutsche Bank and DZ Bank, and European Financial Stability Facility’s €1.5bn 1.7% February 2043s, which was printed on February 6 with Citi, Commerzbank and NatWest Markets on the top line.
The EU scored decent marks for structure/maturity and timing, but market participants were more critical in the other factors.
In BondMarker the EFSF’s deal was marked down most strongly in the structure/maturity category. Some bankers away from the print at the time pointed to it coming just two weeks after a short 30 year from sister issuer the ESM as a reason for it being a tough trade. It also suffered because of strong volatility in the OAT curve, which is often used as a pricing reference for the supranational’s bonds, during execution.
Dollars fare well
Dollar deals scored consistently well in BondMarker this quarter, but some shone especially brightly. The top scoring deal in dollars was African Development Bank’s $2.5bn 1.875% March 2020, which was priced on March 8 and led by BAML, Daiwa Capital Markets, GS, JP Morgan and TD Securities. That achieved an overall average score of 9.1.
Just behind AfDB’s deal with average scores of nine apiece are a $1.25bn 2.125% February 2022 from Nordic Investment Bank, which was priced on January 24, and a $4bn 1.75% March 2020 from KfW, which was priced on February 28.
Citi, JP Morgan, RBC Capital Markets and TD Securities ran NIB’s deal, while KfW mandated Citi, Morgan Stanley and Nomura for its three year print.
Only two sterling deals were scored this quarter and both achieved an average score of nine or above: Alberta’s £650m 1% November 2021, which was led by HSBC and RBC Capital Markets, and priced on February 16.
The UK Debt Management Office scored one of the highest average ratings of the quarter — 9.2 —with a £2bn November 2065 inflation linker tap. That was led by Barclays, Lloyds Bank, NatWest Markets and UBS and was priced on February 21.
About BondMarker
With BondMarker, we aim to provide a quantitative complement to our industry leading bond comments by crowd-sourcing market participants’ opinions. We ask market participants to award deals a score from zero to 10 over five categories.
The five categories encompass pricing, timing, investor distribution, structure/maturity, and performance. A deal that the voter considered very poor would merit a score close to zero and one they considered very impressive print close to 10.
The average total score for each deal in this article was calculated by taking the median score of individual votes in each category on a deal, then the mean of those median scores over the five categories.
Deals are live for voting for one week after pricing and the results are collated and published at the end of that period.
This last quarter GC collected votes on 33 benchmarks, which were priced between January 25 and March 31. GC has not published scores on all benchmarks printed in the first quarter, as some have been excluded due to receiving insufficient votes.
