UPDATE 1-A.P. Moller Maersk tests appetite for low-beta unrated paper

Tue Mar 26, 2013 7:06am EDT

LONDON, March 26 (IFR) - Unrated Danish shipping conglomerate A.P. Moller-Maersk gave a fillip to the under-supplied sterling market on Tuesday, when it began marketing a 12-year bond at 200bp over the 5% March 2025 UK Gilt via Barclays, RBS and Santander GBM.

So far in 2013, German construction company Hochtief and French retailer Rallye have priced unrated bonds, although these were sub-benchmark and denominated in euros, as were a smattering of other unrated deals from a handful of less familiar small-cap companies.

Bankers said that the issuance of unrated paper would likely pick up moving forward, as it can offer the yield that investors are hunting for in the current low-return environment.

Observers struggled to give an indication of fair value on the new Maersk paper, chiefly because unrated sterling bonds rarely print, especially not from credits that have an implied investment grade rating, like Maersk.

It was loosely compared to British retailer John Lewis, which has a bond due in January 2025 quoted around 166bp over Gilts. While both issuers are unrated, there are considerable differences in geography and industries, though.

Maersk was last in the public market in August last year when it brushed off the usual mid-summer lull to price a EUR750m seven-year issue at 200bp over mid-swaps.

Last month, Maersk beat annual profit forecasts and predicted its container shipping business, which accounts for 14% of global container capacity, would benefit from a pick-up in world trade this year, helping to overshadow a warning on falling earnings at its oil business. (Reporting By Josie Cox; editing by Andrew Perrin)

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