Arkéa 10s in Friday upside surprise, SG green debut due
Crédit Mutuel Arkéa attracted over EUR2bn of orders to a EUR500m no-grow 10 year covered bond benchmark today (Friday), allowing it to achieve pricing flat to fair value, with compatriot SG SFH set to follow in the maturity on Monday with its first “positive impact” bond.
Leads Crédit Agricole, Credit Mutuel Arkéa, LBBW, Nykredit and Santander opened books for Crédit Mutuel Arkéa’s EUR500m no-grow 10 year trade with initial guidance of the 11bp over mid-swaps area this morning. Within less than an hour, the leads reported books in excess of EUR1bn, excluding JLM interest, and after around an hour and a half revised guidance to 7bp+/-1bp, WPIR, on the back of over EUR2bn of demand. The spread was ultimately fixed after less than two and a quarter hours, with the leads able to tighten pricing by 5bp from initial guidance to 6bp over, which a syndicate banker at one of the leads said represented a “very good result”.
The lead banker said that even though initial sentiment towards the issue had been largely positive, he had not expected it to go so well – especially on a Friday – with the “super deal” coming in four times subscribed.
He put the new issue premium at zero. Pre-announcement comparables circulated by the leads included Arkéa May 2027s at 5.5bp over on an i-spread basis, Arkéa 2033s at 7.5bp, Crédit Agricole 2029s at 3bp, and Crédit Mutuel-CIC 2029s at 5bp over.
The 10 year deal was priced to yield 0.171%, with a coupon of 0.125%.
“This is not even offering a quarter of a percent coupon and they still had over EUR2bn of demand,” said a syndicate banker away from the leads, “so you can see how crazy this market is.”
The Arkéa deal comes ahead of the expected launch of another French 10 year bond on Monday, with SG SFH having this afternoon teed up its first “positive impact” covered bond. The green project was announced on Monday, with proceeds earmarked for financing residential lending against low carbon homes.
Following the end of its roadshow today, the leads provided an update this afternoon specifying that the inaugural trade will be in the 10 year maturity, with launch as early as Monday, subject to market conditions. SG SFH October 2027s were quoted at 2bp over mid-swaps, mid, and its January 2028s at 2.5bp in comparables circulated by leads ABN Amro, Commerzbank, Danske, ING, SG and UniCredit.