October 25, 2017 / 1:45 PM / a year ago

BNG tightens pricing, Sweden is "a bit slow"

LONDON, Oct 25 (IFR) - Bank Nederlandse Gemeenten managed to tighten guidance by 2bp from IPTs as demand for US dollar issuance remained strong, while Sweden’s guidance remained unchanged, with bankers away from the deal saying pricing looked “a tad tight” to start with.

Leads BMO, Daiwa, Deutsche Bank and TD set the spread for BNG’s two-year benchmark offering at 2bp over mid-swaps, from IPTs of plus 4bp area. Books were in excess of US$2.3bn.

“The deal is going very well - 2bp is probably a bit inside the curve, and certainly dead flat. The other two-year bonds are all marked at around 3bp,” said a lead on the Dutch public sector agency’s Reg S/144A transaction.

Sweden’s guidance, on the other hand, did not move.

The sovereign issuer set the spread via Barclays, Citigroup and JP Morgan at 6bp through swaps for a three-year, unchanged from IPTs. Orders were in excess of US$2.5bn.

According to a banker away from the deal, the lack of further tightening is specific to the Sweden deal rather than a sign of resistance for dollar issuance.

“Sweden looked a bit slow, to be honest. You need to be careful when you’re so far through Libor to not take any juice out of investors,” he said.

Another banker away from the deal agreed that the dollar market is in very good shape.

“There’s been a few weeks of deals tightening, everything is quite solid execution,” he said.

Away from dollars, Korean Development Bank has set IPTs at 105bp area over Gilts, via HSBC and Westpac Banking Corporation, for its sterling Dec 2022 benchmark.

“If compared to Dexia and swapped from euros to sterling you would get to a 40bp premium, which looks about right, if not a bit on the cheap side. It’s a decent level,” said a banker away from the deal.

Another sterling issuer looking to tap the market is the UK’s Debt Management Office.

It has announced that the fourth transaction in its 2017-18 syndication programme will be a 0.125% index-linked Treasury Gilt maturing August 10 2048. The transaction is planned for the week commencing November 6. (Reporting Melissa Song Loong; editing by Helen Bartholomew, Philip Wright)

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