For the first time this year, international demand for dollar bonds picked up this week and drove successful deals for a range of global issuers. Favourable retail sales and CPI data from the US confirmed the market's view that the US economy is slowing and that the Fed will relax its tightening stance. Treasuries rallied on the news and, although some of the gains were retraced after the release of stronger than expected industrial production data, sentiment remains positive. The big story of the week was Deutsche Telekom's decision to raise up to $8bn in the global debt markets. The largest tranche will be a $5bn bond, expected to incorporate five, 10 and 30 year tranches. The balance will be raised through ¥750bn of short to intermediate dated bonds, a £750m long dated issue and a Eu1.5bn five year global. Deutsche, Goldman Sachs and Morgan Stanley Dean Witter have the mandate for the jumbo financing. DtA will price its $1.5bn five year global bond this afternoon (Friday) during New York hours. Launch was delayed by the announcement by the German MoF that DtA will be taken over by KfW. The news is seen by market participants as positive for bondholders of DtA debt, since the agency traditionally trades between 3bp and 5bp wider than its future parent. Like several of the dollar deals launched this week and last, DtA is using US agencies as its pricing benchmark. Wells Fargo is expected today with $750m of 10 year subordinated global notes via Bear Stearns and Credit Suisse First Boston at a spread of 160bp over Treasuries. The IADB won many plaudits for a $2bn three year global transaction. Priced at 5bp over three year Freddie Macs, the bond was substantially placed in Asia, predominantly with central banks, and in the US. Japanese government guaranteed borrowers took a significant step forward this week, JBIC's $1bn five year bond providing the market with its first global by a JGGI, and the first time a JGGI has been able to price through swaps since the Asian crisis in 1997/1998. The deal attracted strong bids from all three financial centres. Mystery deal of the week was a $1bn 10 year Eurodollar issue by the World Bank. Market commentators gasped at the reported pricing of Libor less 30bp and 12bp through agencies. While admitting that there is good demand for longer dated top quality bonds in the newly confident market, many bankers felt that the issue's pricing would have deterred most buyers. Lead manager Salomon, however, reported strong demand from Asia and UK IMGs for a current coupon 10 year supranational bond. An improvement in the euro sector generated by the ECB rate hike and the more stable dollar market provided a solid background for Stora Enso's seven year issue. The deal was increased from Eu500m to Eu850m and priced at an attractive level of Euribor plus 90bp. DaimlerChrysler will price its Eu1bn global bond today at 35bp over swaps, a generous level for the credit, say syndicate managers, but necessary given the still volatile nature of the market. Coca-Cola's German bottling arm will launch its Eu400m five year issue next week via Deutsche and Morgan Stanley Dean Witter at a spread in the Euribor plus mid to high 40s area. Italian telecoms and internet firm Tiscali is expected imminently with a Eu150m five year FRN via BCI and Banca IMI. The deal will be re-offered in the 340bp-350bp over Euribor range. Italian energy company Edison SpA, rated A2/A-, has mandated Mediobanca and UBS Warburg to lead manage its first euro transaction. Roadshows for the up to Eu630m issue start next week. CDC, Deutsche and Dresdner Kleinwort Benson have the mandate to lead Deutsche Hyp's Eu3bn global Pfandbrief following roadshows at the end of June. More global Pfandbrief supply is due from Rheinhyp, which will increase its Eu3bn 5.75% July 2010 issue to Eu5bn. CDC, Commerzbank and Morgan Stanley will lead the deal. Charbonnages de France has awarded the mandate for its Eu500m 11 year bond to ABN Amro and BNP Paribas. Please note that due to an error some bookrunners were credited with incorrect amounts in last week's league tables.
June 16, 2000
