News -
KommuneKredit issues new 1bn USD 3-year benchmark
On Monday 26th February 2024, at 13:30 CET, KommuneKredit announced the mandate for a new USD 1bn no-grow 3-year benchmark transaction with initial price thoughts (IPTs) of SOFR MS+35bps.
The following morning, with a backdrop of constructive market sentiment and indications of interest (IOIs) in excess of USD 2.4bn (excluding JLM interest), KommuneKredit officially opened books at 09:10 CET with spread guidance at SOFR MS+33bps area.
Demand from investors across the spectrum grew steadily over the course of European morning, with books reaching over USD 3.8bn (excluding JLM interest) by the time of the first update at 10:35 CET. Given the quality of the orderbook and to provide clarity to investors, final terms were released with spread set at SOFR MS+32bps, 1bp tighter from spread guidance.
Books closed shortly after at 10:00 UKT in excess of 4.1bn (excluding JLM interest) and the new issue was subsequently priced at 16:09 CET at SOFR MS+32bps, offering a coupon of 4.625% and a re-offer yield of 4.607% (semi-annual), equating to a re-offer price of 99.904% and a spread of 13.4bps over the UST 4.125% due 15 February 2027.
The book attracted strong support from central banks and official institutions (allocated 62%) as well as from bank treasuries (30%). In terms of geographical distribution, the EMEA-region took the lions share (46% allocation) followed by Asia (39%) with the residual allocated to the Americas (15%).
Statement from Daniel Aagaard, Head of Funding & IR Manager, KommuneKredit:
“The US Dollar trades are always special to me. Not only have USD made up an integral part of KommuneKredits strategic funding over an extended period, but taking pause and observing the truly global support to KommuneKredit and the Danish welfare system that our members develop and maintain, is a humbling experience. We thank each and every investor for their commitment to our Funding Program.”
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LEAD MANAGER QUOTES
“Congratulations to the KommuneKredit team for a fantastic 3Y USD 1bn outing. A final order book in excess of USD 4bn is the largest ever for KommuneKredit and the very tight pricing of MS +32 / CT3 +13.4bps is testament to the strong name recognition that KommuneKredit enjoys among investors.”
Massimo Antonelli, Managing Director, BMO Capital Markets
“Citi was delighted to be part of KommuneKredit's first Dollar benchmark of 2024. This deal sets the record for both the largest orderbook and the second tightest spread to US Treasuries for a KommuneKredit Dollar deal. The transaction benefited from the healthy market backdrop but the broad investor support also reflects the popularity of the Kommunekredit name in the Dollar market. Many congratulation to the KommuneKredit funding team for such an impressive outcome!”
Ebba Wexler, Managing Director, Head of Public Sector DCM, Citi
“Congratulations to the KommuneKredit team for a solid outcome on the first USD benchmark of the year! The $1bn no-grow 3-year deal garnered a new record book size for KommuneKredit, thanks to wide-ranging demand from over 80 investors. This allowed the issuer to achieve the joint-tightest Agency funding spread in the 3-year tenor so far this year.”
Tina Nguyen, Vice President, SSA DCM, J.P. Morgan
”KommuneKredit’s new 3Y USD transaction has all their usual hallmarks of successful; with the capped transaction twice subscribed from the Indications of Interest (IOI) phase and doubling thereafter, resulting in their largest ever USD orderbook. KommuneKredit always strike the balance between competitive pricing for the mandate and room for performance; which today’s execution underscores. The orderbook quality and granularity is a testament to KommuneKredit’s global investor appeal and a feather in the cap for the dedicated Treasury team. Congratulations!”
Mark Yeomans, Managing Director, DCM Public Sector, Nomura
"We want to congratulate KommuneKredit on their first 3y transaction in the USD market. With spread tightening 3bps from IPT, and KommuneKredits largest USD orderbook ever well above USD 4.1bn with interest from a granular and well diversified investor base, the end result is nothing short of exceptional. SEB are honoured to have been part of this transaction."
