(Rewrites throughout, adds comment)
By Sarka Halas
LONDON, May 28 (IFR) - The Republic of Austria has opened
books on its first syndicated benchmark issue of 2014, a
dual-tranche deal that includes the sovereign's debut floating
The issuer began marketing the 10-year fixed and six-year
FRN via lead managers Barclays, Commerzbank, Goldman Sachs, HSBC
and UniCredit, with demand at the last update having reached a
FRNs issued by sovereigns are rare. Italy is the only
regular borrower in the format, placing deals via auction, while
Belgium sold a five-year syndication in April 2013.
"FRNs are products marketed more to US-based investors; they
are quite rare in euros and are generally issued in the two- to
three-year maturity," said a co-lead, adding that this bond may
have been based on reverse-enquiry interest.
Another syndicate official said that cash-rich official
institutions and bank treasuries could be interested in the
format, although one banker said FRNs in the five- to seven-year
maturity were not very supra or central-bank friendly.
Guidance on the Reg S June 2020 floater has been set at 2bp
area below six-month Euribor, tighter that initial price
thoughts of flat to 1bp below.
A co-lead spotted Austria's July 2020 fixed rate deal at
mid-swaps minus 6bp, which suggests around 4bp of new issue
premium at the revised guidance level.
Meanwhile indications of interest on the RegS/144A 10-year
bond have reached over 3bn. That figures includes primary
Guidance on the RegS/144a October 2024 benchmark is 13bp
area over mid-swaps, following initial price thoughts of low to
mid teens announced earlier Wednesday.
Leads looked to the interpolated Austrian government curve
for comparables. Austria has an October 2023 bond spotted at
7.5bp over mid-swaps, while a March 2026 deal was seen at around
One lead manager estimated fair value at 11bp to 12bp over
"The 10-year bond is good value, so the sale should go
well," said a co-lead.
The sovereign is rated Aaa/AA+/AAA/AAA, all stable.
(Reporting by Sarka Halas, Editing by Helene Durand, Julian