KommuneKredit launches new 10-year EUR 1 billion benchmark

On Tuesday 30th August, KommuneKredit priced a new EUR 1 billion (no-grow) Sept-32 benchmark.

The orderbook officially opened on Tuesday the 30th of August at 09:10 CET, with an initial spread guidance in the MS+6bps area.

The transaction enjoyed a strong reception from the outset, and on the back of a smooth book building process with orders in excess of EUR 2 bn final terms were announced at 11.40 CET with a 2bps tightening of price. The orderbook ultimately closed with a final re-offer spread of MS+4bps, implying a new issue premium of 1bp relative to KOMMUN’s EUR curve.

At 15:04 CET, the transaction officially priced at MS+4 bps, equivalent to a reoffer yield of 2.445 % and 94.4 bps over the DBR 1.700% Aug-32.

In terms of geographical distribution, the transaction was broadly diversified across Europe, with the largest proportions of investors coming from BeNeLux (36.5 %), Germany (19.2 %) and France (13.6 %). In terms of investor type, Bank Treasuries were allocated 49.7 % of the bonds, while the transaction also attracted strong participation from Insurance / Asset Managers (31.4 %) and Central Banks / Official Institutions (16.5 %).

Statement from KommuneKredit:

Louise Gregersen, Senior Funding & IR Manager

“We are pleased to reengage the EUR market after the summer period and we're very satisfied with the result. With this issue, we have added a new 10-year liquid reference point to our EUR-curve and the final size and reoffer price underline the strong book with high quality investors.”

Lead Manager Quotes

Lee Cumbes, Head of DCM EMEA at Barclays said: “Congratulations to the KommuneKredit team for their EUR 1bn 10Y benchmark, their largest transaction since early 2021. The issuer was quick in seizing a late August issuance window, competing well with its top level SSA peers in the early days of the post summer market. The KommuneKredit team used a nimble strategy to take advantage of the solid primary tone despite the significant market volatility, especially post the Jackson Hole symposium. Kommunekredit secured a high quality final orderbook which confirmed the continued support of its global investor base.”

Mark Andryeyev, Head of Syndicate and Trading at Commerzbank said: “With financial markets experiencing considerable volatility post Jackson Hole, KommuneKredit impressed markets with the very successful 10y bond offering that attracted the second highest orderbook for a 10y bond in its recent history. Despite the very busy competing supply pipeline, the issuer registered a high quality order book, including demand from key bank treasuries, official institutions and asset managers. We congratulate KK for this outcome and feel proud to have been part of this.”

Mark Yeomans, Managing Director, Debt Capital Markets at Nomura said: “KommuneKredit’s EUR 1bn 10-year transaction marks another landmark outing for the borrower, following in the footsteps of the previous 7Y outing, being 2x oversubscribed and tightening 2bps from guidance. All the more impressive given the volatile back drop in fixed income but there is a lot to be said about consistency. It is this consistency in credit quality, market presence and investor enfranchisement that ensures KommuneKredit is a globally recognised go-to AAA investment.”

Kamal Grossard-Amin, Head of SSA DCM at Nordea said: "Amid a shaky rates backdrop following ECB and Fed hawkishness at last week's Jackson Hole conference, KommuneKredit's outcome for their latest EUR benchmark outing this week is superb. The ability to price 2bps inside guidance while retaining a strong, well diversified and high quality order book off the back of one of the most volatile periods in rates this year speaks volumes to KommuneKredit's standing in the SSA market."

Laura Quinn, Head of Primary Markets at TD Securities said: "We congratulate KommuneKredit on nimbly navigating tricky markets and launching an exceptional new 10y EUR benchmark. Investors recognized the robust credit quality offered by KommuneKredit and were quick to take the opportunity to purchase this rare offering."