* Books for UniCredit Tier 2 subordinated bond top USD2bn
* Guidance tightened to 6.5%
By Aimee Donnellan
LONDON, April 24 (IFR) - Italy's UniCredit, rated
Baa2/BBB+/BBB+, has opened books on a US dollar-denominated Tier
2 bond, its first subordinated benchmark issue in six months, as
it seeks to capitalise on a widespread peripheral rally.
The new Reg S deal, with expected ratings of Baa3/BBB/BBB,
was announced late on Tuesday. Bookrunners BNP Paribas, Citi and
UniCredit set price talk on Wednesday morning at 6.625% area and
later tightened that to 6.5% area as books grew to more than
Books are expected to go subject at short notice, with
pricing later today.
The bond will have a one time call in five years, and
coupons will reset with no step-up if that call is not
Bankers close to the deal said it was difficult to estimate
an accurate new issue premium mainly because the issuer's last
deal was not only in euros but also had a bullet structure.
"We calculated the relative value between euro and dollars
for UniCredit because it doesn't have a 10NC5-year that would be
a relevant marker," said a syndicate banker.
As pricing references, the leads looked to UniCredit's last
subordinated bond issue - a EUR1.25bn 10-year bullet transaction
which priced in October and was tapped by EUR250m in December -
as well as to other outstanding Tier 2 euro and dollar paper.
The 6.95% October 2022 bond, which printed at mid-swaps plus
510bp on the back of EUR4bn of orders, was bid at mid-swaps plus
466bp on Wednesday morning.
UniCredit's 6% 2017 US dollar Tier 2 bond, meanwhile, was
bid at mid-swaps plus 450bp on the bid side pre-announcement.
ABN AMRO's 6.25% USD1.5bn 10NC5 transaction was also
referenced, another banker on the deal said. That 2022 bond was
bid at mid-swaps plus 342bp on Wednesday morning, having priced
at 545bp over mid-swaps in September last year.
TIMED TO PERFECTION
UniCredit has a relatively strong track record in
opportunistic deals. Its October issue was the first eurozone
peripheral bank subordinated bond to price in over a year.
With its latest issue, UniCredit is likely to attract demand
from Asian retail investors that have proven receptive to
European issuers that provide higher yield in this low rate
The deal also coincides with a strong rally in 10-year
Italian government yields after President Giorgio Napolitano
gained a second term which reduced the likelihood of another
election in the country this summer.
Italian 10-year yields fell to 3.93% at one point on Tuesday
- the first time they have broken below 4% since September 2010.
Those yields were at 4.95% following the country's election
stalemate at the end of February and the subsequent Cyprus
Irish and Spanish 10-years also rallied sharply on Tuesday,
although yields are off their lows in Wednesday trading.