LONDON, Jan 23 (IFR) - Intesa Sanpaolo became the first
peripheral bank to tap the benchmark floating-rate note market
in 2013, potentially blazing a trail for other national
champions looking to raise cheap debt to repay money borrowed
from the ECB.
The EUR750m two-and-a-half-year senior floater priced on
Tuesday at three-month Euribor plus 155bp on the back of a book
of EUR1.2bn comprising more than 150 orders. This represented no
new issue premium versus Intesa's outstanding FRN curve.
Lead managers Banca IMI, DZ Bank, LBBW, Raiffeisen Bank
International and UniCredit said the bond was performing well in
the secondary market, tightening marginally to 153bp over.
"This will hopefully be the beginning of a trend of
peripheral banks - especially Italian - issuing FRNs," said one
of the leads.
Richard Thomson, senior credit analyst at Henderson Global
Investors, said national champions should not have any
difficulty in attracting investor demand if the pricing is
right, highlighting that the order books on peripheral bonds
have been well covered so far this year.
"It makes sense in the current environment for peripheral
banks to use all funding routes - fixed, floating and secured -
to issue at these kinds of spreads," said Thomson.
Banks (including private banks) took 52% of the Intesa
issue, funds 40%, insurers 5% and others 3%. By region, Italy
accounted for 27%, France 18%, Germany 15%, Iberia 12%, Austria
10%, the UK 5%, the Nordic countries 5%, Benelux 4% and others
FOLLOWING THE CORE
Intesa's bond follows in the footsteps of a group of core
issuers that have taken advantage of cheap short-dated funding
to issue FRNs well inside the ECB's main refinancing rate of
75bp. Bankers have predicted at least some of the proceeds will
go towards reimbursing the ECB.
Peripheral banks still do not benefit from such cheap
funding levels, but some are thought to be lining up LTRO
repayments as a sign of strength to the market.
"Certainly, repaying its LTRO money is an important
marketing message that Intesa wants to project, similar to that
of the French banks," said one official on the Intesa deal.
Intesa was one of few banks to reveal its total ECB
borrowings of EUR36bn across the two LTROs in late 2011 and
Enrico Cucchiani, Intesa's chief executive, told Italian
newswire Radiocor on Wednesday that it was premature to start
thinking about reimbursing LTRO money.
This contrasts with other peripheral banks such as La Caixa,
which has made it clear it intends to begin repaying LTRO money
once the first opportunity arrives on January 30.
There are doubts whether second-tier banks will be able to
muster anything more than symbolic ECB repayments due to the
economic costs of doing so.
For instance, Intesa paying 155bp over three-month Euribor
on this latest FRN equates to 1.76% - 101bp over the interest
rate charged on the ECB's LTRO.
Intesa is considered one of the more solid institutions in
the periphery, moreover, and its funding costs have been
progressively falling as the eurozone crisis has eased.
(Reporting By Christopher Whittall; Editing by Philip Wright,