March 4, 2014 / 5:15 PM / in 4 years

UPDATE: Financials jump in on both sides of pond

NEW YORK, March 4 (IFR) - Financials are attracting as much investor interest Tuesday as corporates, with some issuers able to ratchet in pricing by as much as 25bp from whispered levels.

Even after dominating the issuance calendar in the first two months of the year, FIG issuers drew more strong demand again in the second session of March - from both sides of the Atlantic.

Names from Canada and Asia joined US money center bank Citigroup in the US dollar market, while Nationwide Building Society stunned London bankers by attracting more than GBP9bn of orders for the first-ever sterling-denominated Additional Tier 1 capital security.

Yankees tapping the US market include Royal Bank of Canada with a benchmark offering of five-year fixed and floating-rate notes whispered in the high 60s and led by RBC, Credit Agricole and Goldman Sachs.

Meanwhile Asian insurance company AIA Group (A3/A) (formerly part of AIG) was able to pull in launch spreads by as much as 25bp today on its debut in the Yankee market.

The US$1bn offering of five and 30-year fixed rate securities is led by Citi, Deutsche Bank, HSBC and Morgan Stanley.

AIA has often issued in the dollar-denominated Reg S market, but this is the first time it has tapped the US domestic investor base.

It launched US$500m of five-year notes at T+80, more than 20bp tighter than the low 100s initial price thoughts and 5bp tighter than its T+85bp guidance.

Meanwhile the US$500m 30-year bond was launched at T+135bp, 25bp tighter than initial whispers of T+160bp area and 5bp tighter than guidance of T+140bp area.

Comparables include its outstanding Reg S 1.75% 2018s at G+103bp; its 3.125% 2023s at G+160bp; MetLife’s 4.368% 2023s at T+98bp or G+105bp; MET’s 4.875% 2043s at T+107bp; AFLAC’s 3.625% 2023s at T+93bp or G+105bp; Allstate’s 3.15% 3.15% 2023s at T+71bp or G+83bp; Prudential’s 2.3% 2018s at T+51bp or G+72bp; Pru’s 4.5% 2021s at T+47bp or G+86bp; Pru’s 5.1% 2043s at T+120bp; and AIG’s 4.125% 2024s at T+117bp or G+116bp.

Bank of Tokyo Mitsubishi UFJ (Aa3/A+) announced a four-part offering of three-year fixed and floating-rate notes, as well as five and 10-year tranches, and then added a 30-year tranche at the guidance stage.

The deal started out with initial price thoughts of 70bp-75bp over Treasuries for the three-year; 95bp area for the five-year; and 120bp area for the 10-year tranche.

Demand enabled leads Morgan Stanley, Mitsubishi, BAML and JP Morgan to announce guidance 10bp tighter than whispers across the tranches, with the three-year at 60bp area, the five-year at 85bp area, the 10-year at 110bp area and the new 30-year tranche at 110bp area.

Citigroup has jumped in to take advantage of the insatiable appetite for short-dated notes, with a benchmark offering of three-year fixed and floating rate notes at initial price thoughts in the mid to high 70s.

The closest comparable is an old five-year, its 4.45% January 2017s at T+66bp or G+61bp.

Air Lease Corp (rated BBB- by S&P) is in the market with a US$350m seven-year SEC-registered offering via BAML, Citi, JPM and Royal Bank of Scotland.

It announced guidance at T+180bp area, 20bp tighter than 200bp area whispers.


The avalanche of orders for Nationwide’s sterling-denominated AT1 has raised hopes among European banks seeking capital that they can add sterling to the US dollar and euro markets as a source of demand for their capital.

“This deal will be watched closely by UK banks looking to raise capital in their home currency and European issuers keen to diversify into new markets,” said a banker in London.

The GBP1bn is perpetual with a first call date on June 20 2019, and will be triggered if Nationwide’s fully-phased Common Equity Tier 1 ratio falls below 7%.

In the case of such an event, the securities will be converted in full into Core Capital Deferred Shares (CCDS).

Bookrunners Citigroup, Deutsche Bank, RBS and UBS began testing interest for the bond at 7.25%-7.5%, having looked to Barclays euro and dollar Additional Tier 1 bonds for guidance on pricing.

Those perpetual non-call five-year deals were bid at mid-swaps plus 560bp and plus 520bp, respectively, for yields of 7.25% and 7%.

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