Despite the increasingly violent interruptions of volatility, the corporate bond market achieved some stellar transactions in 2015. Not only were issuers more diversified in their funding, they were sometimes also more daring. There was a large shift in European investment grade issuance last year. Bond issuance in euros by US companies, known as reverse Yankee deals, increased by 57%. For that reason, GlobalCapital has introduced a new Award, specifically for these deals. Our congratulations to the winners. For High Yield Award winners, see separate story here. European Corporate Deal of the Year by a European Issuer
GDF Suez
€500m 0% March 2017
€750m 0.5% March 2022
€750m 1% March 2026
€500m 1.5% March 2035
BNP Paribas, HSBC (global coordinators), Bank of America Merrill Lynch, Barclays and Crédit Agricole
A sign of the times? Undoubtedly. But printing a 0% coupon shows chutzpah, regardless of how favoured an issuer is by near-zero interest rates. As with any snazzy bond deal, though, the zero coupon tranche was just the icing on the cake. Aiming for a 10 year average maturity profile, GDF exploited the spectrum of European investors’ tastes for tenors with panache. By issuing its €2.5bn deal on March 4 in four tranches with maturities from two to 20 years, GDF — since renamed Engie — got what it wanted at better pricing than it would have with a single 10 year bond.
2. British American Tobacco
€600m 2% March 2045
€800m 1.25% March 2027
€800m 0.875% October 2023
€800m 0.375% March 2019
Deutsche Bank, Santander (global coordinators) Barclays, Commerzbank, ING, Lloyds, SMBC Nikko, UniCredit
3. Royal Dutch Shell
€1.2bn 3 month Euribor + 40bp September 2019
€1.25bn 1.25% March 2022
€1bn 1.875% September 2025
Deutsche Bank, HSBC, Société Générale
European Corporate Deal of the Year by a Non-European Issuer
Coca-Cola
€2bn 3 month Euribor + 15bp March 2017
€2bn 3 month Euribor + 23bp September 2019
€1.5bn 0.75% March 2023
€1.5bn 1.125% March 2027
€1.5bn 1.625% March 2035
Bank of America Merrill Lynch, Barclays, HSBC, Morgan Stanley
The Atlanta-based soft drinks company’s €8.5bn big gulp staggered syndicate bankers when it hit the screens in February: it was the second biggest European corporate bond ever. The reverse Yankee trend upended the European market last year, but Coca-Cola showed the European market’s true potential. Five tranches of fixed and floating rate notes exploited every pocket of demand. Remarkably, it was Coca-Cola’s own biggest ever bond issue. If there was ever an outside endorsement of the European bond market, this was it.
2. MasterCard
€700m 1.1% December 2022
€800m 2.1% December 2027
€150m 2.5% December 2030
Barclays, Bank of America Merrill Lynch, Citi, Deutsche Bank
3. Berkshire Hathaway
€750m 0.75% March 2023
€1.25bn 1.125% March 2027
€1bn 1.625% March 2035
Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs, Wells Fargo
Corporate Hybrid Capital Deal of the Year
BHP Billiton
€1.25bn 4.75% non-call 5.5 year
€750m 5.625% non-call nine year
£600m 6.5% non-call seven year
$1bn 6.25% non-call five year
$2.25bn 6.75% non-call 10 year
Barclays, Bank of America Merrill Lynch, BNP Paribas, Goldman Sachs
The largest ever one day corporate hybrid bond sale. BHP Billiton tapped the dollar, euro and sterling markets in a single day in October. But that was in some ways secondary to the deal’s true wow factor. The European bond market was in risk-averse mode, making hybrids of any kind problematic. Worse: mining and oil companies were the least favoured sector – the deal came in September, just weeks after the shocking oil price falls of late August.
But BHP and its leads waited for a window and pounced when one opened. The European bond market is all too often slowed down by haggling over a few basis points of new issue premium. BHP Billiton showed that while market conditions can change quickly, if an issuer is willing to adapt to those conditions, the market can still function, even for an ambitious deal.
2. Total
€2.5bn 2.25% non-call six year
€2.5bn 2.625% non-call 10 year
Barclays, Citi, HSBC, Société Générale
3. Air France
€400m 6.25% non-call 5.5 year
BNP Paribas, Crédit Agricole, Deutsche Bank, Morgan Stanley, Natixis
Sterling Corporate Deal of the Year
British American Tobacco
£350m 4% November 2055
€600m 1% May 2022
Barclays, Citi, Commerzbank, HSBC, Lloyds, Royal Bank of Scotland
Issuing a long maturity is hardly exceptional in the sterling bond market. But BAT’s 40 year trade was impressive even by the standards of a market which prefers to stay far down the curve. For sterling market participants 2015 was underwhelming but BAT’s trade was part of a flurry of deals that ended the year on a better note. Sometimes a deal stands out by playing straight to the strengths of its market. BAT was a stellar reminder of what the sterling corporate bond market is good for.
2. Hammerson
£350m 3.5% October 2025
BNP Paribas, HSBC, Lloyds Bank
3. Western Power Distribution
£500m 3.625% November 2023
Barclays, Lloyds, RBC Capital Markets, Santander