Some corporate syndicate bankers had expected issuers to wait until Thursday — after the Greek parliament voted on the bailout package proposed by its creditors — for issuance to restart.
“It was a classic case of buy the rumour and sell the fact,” said a banker close to the deal. “The issuer saw the market rally on rumours that the Greek parliament would approve the package. And we all know that fund managers have very high cash balances, they have a real incentive to invest.”
Even those bankers that were surprised by the decision to target a Wednesday execution admitted that AdP was an almost ideal candidate to reopen the market.
“It’s a very good issuer to reopen the market,” said one syndicate manager. “They’ve got a decent curve, but the market isn’t oversupplied with their paper. It’s a rock solid credit with an A+ rating [from S&P] and plenty of support from domestic investors.”
AdP may have been motivated by a desire to avoid competing issuance, added the banker.
Bookrunners BNP Paribas, HSBC, Natixis and Société Générale circulated initial price thoughts of 75bp area over mid-swaps for the €500m eight year no-grow deal.
An attractive new issue premium — seen as around 35bp by some bankers away from the deal — propelled the order book to around €3.75bn shortly before closing, suggesting that investors were not bothered by the issuer’s decision to duck into the market before the Greek vote.
That order book allowed the leads to revise guidance to 60bp-65bp over swaps, before setting the spread at 60bp with an order book of around €5bn, though that shrank to €4.5bn post-reconciliation.
The new issue premium was about 20bp, agreed bankers on and away from the deal.
“They have 2022s, 2024s and 2025s outstanding,” said a banker at one of the leads. “If you interpolate the 22s and 24s then that suggests 39bp over mid-swaps as fair value. However, if you take the view that the 2024s are illiquid and use the 2025s then you get fair value of 44bp. That would suggest we’re looking at something in the high teens to 20bp.”