KommuneKredit launches new 5-year USD 1 billion benchmark
On Wednesday 17th May, KommuneKredit priced a new USD 1 billion May-28 benchmark.
Tuesday morning 16th May KommuneKredit announced an upcoming USD-benchmark with initial-price-thoughts of SOFR MS+47bps area.
The transaction enjoyed a very strong reception and had, by the time books opened just after 09.00 CET on Wednesday morning, gathered indications of interest in excess of USD 1.9 billion (incl. USD 100m JLM). Guidance was announced at SOFR MS+45bps area, 2bps tighter than IPTs.
Momentum continued throughout the morning. By the time of the first update at 09.55 CET books had reached in excess of USD 2.6 billion (incl. USD 100m JLM), and the spread was tightened and fixed at SOFR MS+44bps, 3bps tighter than IPTs.
At 11.25 CET it was announced that the orderbook closed in excess of USD 3.1 billion (incl. USD 100m JLM).
In terms of geographical distribution, the transaction was broadly diversified across EMEA (59%), Americas (23%) and Asia accounts (18%). Central Banks & Official Institutions were the largest investor component taking 51% of final allocations, supported by strong participation from Banks & Bank Treasuries (45%) and Fund Manager / Pension Fund / Insurance accounts (4%).
Statement from KommuneKredit:
Louise Gregersen, Senior Funding & IR Manager
“We’re thrilled to see, that our long-term commitment to USD as a strategic funding market is recognized by the international investor community, and equally pleased to see our investors benefit from the immediate performance of the bond.”
Lead Manager Quotes
“Congratulations to the KommuneKredit team for a great USD 1bn 5-year outing. The 5-year maturity hasn’t always been easy to access for agency issuers, but the USD 3bn orderbook – the largest ever for a KommuneKredit USD benchmark – is testament to the great name recognition that the issuer enjoys in the USD market. The final pricing of MS +44 represents zero new issue premium vs recent supply and secondary comparables. Congratulations again to the team!” Massimo Antonelli, Managing Director, BMO Capital Markets
"Congratulations to the KommuneKredit team on a fantastic outcome. The transaction extends KK's curve with a new liquid reference point, as well as marking its return to the US$ market for the first time since January 2022. The issuer successfully navigated competing supply, and the deal met with exceptionally strong demand being three times oversubscribed and with pricing 3bp tighter than IPT’s.” Jez Walsh, MD, Head of Debt Syndicate, Daiwa Capital Markets Europe
“Once again, KommuneKredit’s successful return to the USD market was highlighted by a 3x oversubscribed orderbook for the new 5-year benchmark. Taking advantage of upbeat momentum in the USD SSA primary market, KommuneKredit’s agility was met with high quality demand allowing the issuer to tighten the spread 3bp. The issuer’s AAA status and relative rarity remain key drivers of the investor demand for high quality paper in the market.” Lukas Lippenmeyer, SSA DCM, Deutsche Bank.
“Congratulations to the KommuneKredit team on this highly successful return to the USD market; their first public USD transaction since January 2022. Despite a busy primary market backdrop, KommuneKredit’s ability to garner such a high quality orderbook of over $3.1bn is a clear testament to the strong & loyal following that they enjoy within the global investor community. RBC was delighted to have been involved on this successful transaction.” James Taunton, Director, RBC Capital Markets
“A true statement of strength delivered by KommuneKredit today, returning to the USD market. KommuneKredit’s long-term work engaging with investors globally is certainly paying dividend and another solid transaction can be put to the records here.” Anna Sjulander, Head of SSA Origination, SEB