Foreign banks continued to tap the US dollar market for funding on Tuesday, filling up on short-dated senior debt amid a continued improvement in sentiment towards financial credits.
Swedish lender SEB was set to pay a smaller new issue concession compared to its recent euro deal, while Commonwealth Bank of Australia used its large book to squeeze pricing.
Tuesday's deals followed senior trades from Danske Bank, Abbey National Treasury Services and a covered bond from Toronto-Dominion Bank on Monday, which were all well received.
"There's been a dramatic improvement in FIG spreads generally and in Europe in particular," said a DCM banker.
"With the thaw in overall capital markets, a lot of have pretty significant funding requirements they are getting after."
The average spread for senior bank debt in US dollars was 167bp as of Monday evening, compared to wides of 186bp on February 11, according to Bank of America Merrill Lynch data.
European banks rushed to issue in domestic markets in mid-February as a sell-off in banking sector credits eased. Some are now making a bid to diversify funding as spreads improve in dollars, said a syndicate banker.
"They hit the market heavily for covered and unsecured, and at least at the front end, dollars look attractive or better," the banker said.
SEB, which printed 1bn of 5.5-year debt three weeks ago with a new issue concession in the low teens, launched a US $1.25bn five-year on Tuesday with a 7bp new issue premium.
Leads Bank of America Merrill Lynch, Goldman Sachs, J. P Morgan and SEB built a US $2.4bn book for the trade, according to a banker on the deal.
Final pricing was T+130bp, in line with guidance and 15bp inside IPTs.
CBA offered around 25bp of premium at IPTs of T+120bp for a three-year fixed and the equivalent over Libor for the three-year floater, and T+140bp for the five year.
With a US $5.8bn book, final pricing was T+108bp for the US $750m three-year fixed, L+106bp for the US $750m three year FRN, and T+125bp for the US $1bn five-year - pointing to a new issue concession of about 7bp on the three-year fixed and 8bp on the five-year.
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