KommuneKredit’s first transaction of 2022 is a 2-year USD 1 bn benchmark

On Thursday 13th January, KommuneKredit priced a new USD 1 billion (no-grow) Dec-23 benchmark.

KommuneKredit announced the first 2-Year USD benchmark in 2022, a USD 1 billion (no grow) Dec-2023 benchmark at 13.30pm UKT on Wednesday afternoon. Initial-price-thoughts of SOFR MS+14bps area were released alongside the mandate.

The transaction enjoyed a strong reception from the outset, and the orderbook ultimately closed with a final re-offer spread of SOFR MS+13bps, equivalent to CT2+10.8bps.

In terms of geographical distribution, the transaction was broadly diversified across EMEA (52 %), Americas (30 %) and Asia accounts (18 %). Central Banks & Official Institutions were the largest investor component taking 72 % of final allocations, followed by Banks (21 %) and Other accounts (7 %).

Statement from KommuneKredit:

Daniel Aagaard Pedersen, Head of Funding and IR

“We are quite pleased to get the new funding year started by re-engaging with short-end investors in USD. We have taken note of the very strong contribution from the Central Bank and Official Institutions community – some of whom may have had difficulties in extending to the 5-year prints we did in the last few USD benchmarks. The investor interest coupled with the tightest ever print versus USD Treasuries, makes us hopeful for another productive funding year in KommuneKredit.”

Statements from the Joint Lead Managers:

Massimo Antonelli, Managing Director, BMO Capital Markets

“Another well oversubscribed benchmark transaction for KommuneKredit in the USD fixed rate market, in what has been an under-supplied 2Y tenor so far in 2022 and also looking back at Q4-21. Over 70 % of the bonds were placed in the hands of Central Banks and Official Institutions, testament to KommuneKredit’s strong name recognition in the USD market. At CT2+10.8bps, this is the tightest-ever print for KommuneKredit vs Treasuries in USD.”

Pierre Blandin, Global Head of SSA Origination, Credit Agricole CIB

“We were very pleased to contribute to the successful start of KommuneKredit’s new funding year and would like to congratulate the team for a great result. The combination of tight pricing, oversubscribed orderbook and quality of investor participation once again underlines KommuneKredit’s stellar reputation in the SSA market. With more than 70 % of the transaction allocated to the highest quality Central Bank and Official Institutions, KommuneKredit has once again demonstrated the ability to align itself with key investor demand at the short-end.”

Jez Walsh, Managing Director, Head of Debt Syndicate, Daiwa Capital Markets

“Following the hawkish FOMC in December and subsequent accompanying minutes released last week, and with 2-year yields having backed up by 40 basis points since the beginning of December, it feels like much of the expected rate hikes are already priced in and hence short end yields offer an attractive proposition for investors in particular Central Banks and Official Institutions. KommuneKredit successfully took advantage of this, with 72 % of the trade allocated to these investors, in what is the issuer’s first US$ benchmark shorter than 5 years since 2019."

James Taunton, Director, RBC Capital Markets

“Congratulations to the KommuneKredit team on this impressive transaction to commence their 2022 funding programme. The $1.5bn+ orderbook saw broad geographical distribution across the investor spectrum, with particularly strong participation from the global Central Bank & Official Institution community. To achieve such a result at their tightest ever spread vs. US Treasuries speaks volumes to the loyal investor following that KommuneKredit enjoys. RBC was delighted to have been involved in the transaction.”