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UPDATE 1-Republic of Austria plans 10-year euro benchmark bond
May 27, 2014 / 3:06 PM / 3 years ago

UPDATE 1-Republic of Austria plans 10-year euro benchmark bond

(Rewrites throughout, adds comment)

By Sarka Halas

LONDON, May 27 (IFR) - The Republic of Austria is set to sell a new 10-year syndicated euro benchmark bond, while also exploring the possibility of a rare floating rate issue.

Barclays, Commerzbank, Goldman Sachs, HSBC and UniCredit have been mandated as bookrunners, with the remaining primary dealer group participating as co-leads.

One lead said the potential six-year floating rate note is dependent on feedback from investors based only on the format, and not on initial price thoughts. The banks will be contacting investors Tuesday evening and Wednesday morning.

“Yields are very low and the difference in yield between a fixed and a floating rate note could be enough to do the FRN in this market,” said one syndicate official.

He added that cash-rich official institutions and bank treasuries could be interested in such a deal.

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.

Austria was last in the market back in September with a EUR4bn 1.15% October 2018 bond.

The sovereign’s last 10-year was some five months before that, and was part of a two-tranche bond for a total of EUR4.5bn.

The EUR3bn October 2023 portion sold at mid-swaps plus 8bp, having first been marketed in the high single digits over. The deal is bid at around plus 10bp on Tuesday afternoon, according to Tradeweb prices.

The EUR1.5bn May 2034 issue priced at mid-swaps plus 19bp, the wide end of plus 18-19bp guidance, and is bid on Tuesday at plus 12bp.

The new Reg S/144a deal is expected to be launched and priced soon.

The sovereign is rated Aaa/AA+/AAA/AAA, all stable outlook. (Reporting by Sarka Halas; editing by Julian Baker)

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