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By Helene Durand
LONDON, March 25 (IFR) - Troubled lender Banca Monte dei
Paschi di Siena is expected to sell its first senior unsecured
transaction since 2012 on Tuesday, taking advantage of investor
demand for higher yielding bank debt.
Even though the Italian bank has yet to complete its
turnaround, having been severely hit by the eurozone sovereign
crisis and a derivatives scandal, investors are already piling
into the transaction.
"There is a price for almost anything right now and
investors feel that as long as they have enough disclosure and
enough details on a bank's balance sheet, they can get
involved," said a senior debt capital banker.
"The problems might be there and might get worse but as long
as there is a plan and details, investors can get comfortable."
On Friday, a regulatory filing revealed that Blackrock had
acquired a 5.748% stake in MPS, making it the second largest
investor in the bank and diluting the Monte Paschi stake
MPS mandated Banca IMI, JP Morgan, Mediobanca, MPS Capital
and RBS on Monday afternoon. Leads began marketing the five-year
deal on Tuesday morning at 290bp area over mid-swaps, before
setting official guidance at 280bp area with interest at around
EUR2.75bn from over 200 accounts. Using current market rates,
that suggests a yield of some 3.8%.
"This is the world we live in right now," he said. "We were
pleasantly surprised by the number of investors that are
following the credit and we didn't have to spend a lot of time
doing basic re-education on the name."
MPS's five-year credit default swaps have rallied massively
since July 2012 when they hit 875bp. The performance has
continued in 2014 and they have moved from 382.5bp at the end of
January to 232.5bp today.
The bank is preparing a EUR3bn capital increase which should
get it back on its feet, and which has helped the CDS recovery.
Investors appear comfortable buying the credit despite its
troubled history and the fact that bail-in of senior debt is now
very much a reality after the EU reached a deal on banking union
The new bond will be MPS's longest senior point on its
curve. The current longest bond is a July 2015 note, which was
quoted at 179bp over mid-swaps, according to a lead manager.
However, the closest comparable is a recent five-year for Banco
Popolare SC which priced in early March at 255bp over mid-swaps.
That deal was trading at 238bp over on Tuesday.
The new issue is expected to be rated B2/BBB/BBB by
(Reporting by Helene Durand, editing by Julian Baker)