Westpac NZ sold its first euro benchmark in over two years today (Wednesday), a €850m seven year trade that built on a reopening of the market by BPCE SFH yesterday by similarly paying a new issue premium of 2bp-3bp, even if its oversubscription was more modest.

Today’s deal for Westpac Securities NZ Ltd follows a €750m 10 year for ASB Finance Ltd on 11 May, which was the first euro benchmark from New Zealand since Westpac NZ last tapped the market with a €500m five year in January 2019.

A banker at one of the leads said Westpac NZ announced its mandate yesterday in light of its absence from the market, allowing the issuer to reengage with investors and provide a credit update ahead of the planned deal.

“It enjoyed a strong reception,” he said, “hence the decision to go out this morning.”

Leads HSBC, JP Morgan, UBS and Westpac went out with guidance of the mid-swaps plus 15bp area for the June 2028 issue, rated Aaa/AAA (Moody’s/Fitch). After a little over two and a half hours, a book update put demand above €950m, including €85m of joint lead manager interest, and the spread was subsequently set at 12bp on the back of orders above €1.05bn. The new issue was ultimately sized at €850m (NZ$1.44bn), with the final book above €950m.

The lead banker put the new issue premium at 2bp-3bp, after BPCE paid around 3bp yesterday on its €1.5bn long nine year green covered bond. He saw ASB’s €750m 10 year issue at 12bp over, the same level at which it was re-offered two weeks ago.

“It’s really pleasing, because we had a bit of a wobble, but it feels like we’ve found a new base, albeit with new issue premiums of 2bp-3bp.”

A syndicate banker away from the leads was also encouraged by the new supply.

“New issue premiums are clearly back in play,” he said. “Investors have learned that they need a bit of new issue premium because the initial performance of new issues is not a given anymore.

“But, for sure, investors are still there.”

He said that for the wider market it was more important to see oversubscribed order books than a core Eurozone name pricing closer to the levels of a fortnight ago but with limited oversubscription.

But another banker away from the leads was surprised that Westpac NZ had taken €850m when its final order book was less than €1bn and suggested this could limit the performance of the trade.

The lead banker said the quality of orders supported the size of the transaction relative to the size of the book.

“It is great to see another New Zealand issuer come to the market and do €850m,” he added. “It bodes well for ongoing supply from non-Eurozone names.”