News -
KommuneKredit EUR 500mm increase of 0.01% issue due 4 May 2034
On Wednesday 29th September, KommuneKredit priced the EUR 500mm increase of 0.01% due 4 May 2034, bringing the new outstanding amount to EUR 1,000,000,000. The reopening of the bond was jointly led by Goldman Sachs International, J.P. Morgan, SEB, TD Securities.
The mandate was announced to the market at 2:20pm CET on Tuesday 28th September. Books opened at 9am CET the following morning with guidance in the MS+8bps area. By 10:35 CET the order book had accumulated to over EUR 1.3bn, thus allowing the guidance to be revised to the MS+6bps area. Books closed at 11:00am CET with orders in excess of EUR 1.15bn at guidance. The spread was fixed at MS+5bps, 3bps inside initial guidance. A reoffer yield of 0.344% was set, translating into a reoffer price at 96.016% for the 0.01% coupon bond. The issue also comes at a final spread of 55.5bps over the 15-Aug Bund.
Investors participated from across the world, with the lion share derived from Germany/Austria (51%), the Nordics (22%) and BeNeLux (14%). In terms of investor type, the deal was dominated by Banks who accounted for 35%, followed by Asset Managers (34%), Central Banks and Official Institutions (29%), and other investors (2%).
“We are very pleased with our second primary market EUR activity of the year. This transaction – and the choice of a tap rather than a new benchmark series – represents another important step towards our strategy of building a curve with liquid points to cater to investors with size or liquidity constraints,” says Daniel Aagaard Pedersen, Head of Funding and IR at KommuneKredit.
Comments from the Lead Managers
“Many congratulations to the KommuneKredit team for successfully tapping their 2034 line to bring it to EUR 1bn notional. Despite a volatile rates market, the trade was well received by a broad range of high quality investors which enabled KommuneKredit to successfully achieve their pricing ambitions.”
Lars Humble, Head of SSA, Goldman Sachs
“We would like to congratulate KommuneKredit on this very solid return to the public EUR market. KommuneKredit have managed to create a strong following in the market with a clear and transparent strategy and this was manifested in this transaction with a very robust participation among institutional investors across Europe.”
Johan Sedlin, Senior SSA Bond Originator, SEB
“J.P. Morgan was delighted to partner with KommuneKredit on its longest-dated benchmark transaction of the year, a successful €500mm no-grow tap of the existing 2034’s line. The transaction achieved a reoffer spread 8bps tighter than the original issue a year ago and priced at 1-2bp through the secondary curve, on the back of a >2x oversubscribed book. A clear testament to increasingly strong investor support for the name, as well as a seamless execution by the KK funding team!”
Tina Nguyen, Vice President, J.P. Morgan
“KommuneKredit was agile and identified an excellent funding window in supportive market conditions to issue their second EUR offering of 2021. Their commitment to providing liquidity to investors via a 500m tap was clearly appreciated by the market with such a strong response and resultant 3bps tightening. By pricing inside secondary valuations, this transaction yet again highlights the rarity value and intrinsic qualities of KommuneKredit's EUR bonds."
Laura Quinn, Managing Director, Head of Primary Markets, TD Securities, Dublin
