Friday, February 9, 2018

A new 7-year bond by Hellenic Republic - 3.500% the yield

Press Release – 8 February 2018 - Hellenic Republic – EUR 3.0 billion Notes due 15 February 2025 

Transaction Highlights 
 On Thursday, 8 th February, the Hellenic Republic priced a new €3bn 7-year RegS/144a benchmark at a re-offer yield of 3.500%. Pricing equated to a spread of 311.2 basis points over the reference Bund, 0.5% DBR due February 2025.

  Orderbooks were oversubscribed for a total volume in excess of €6bn from around 210 investors. This permitted pricing to develop from the initial price thoughts of 3.75% area to live guidance of a 3.500% to 3.625% range, finally being set at 3.500%.

  Today’s new issue marks the Republic’s first new bond issuance since their €30bn debt exchange exercise in November 2017, which resulted in five new benchmark references for the sovereign (GGB Jan-23, Jan-28, Jan-33, Jan-37, Jan-42), providing further liquid pricing references for today’s new transaction. For comparison, this new 3.500% GGB due February 2025 follows a previous 5-year syndication (due August 2022) which was executed in July 2017 with a coupon of 4.375%, combined with a switch tender of the existing April 2019 issue. The order book of the August 2022 comprised €4.7bn in new cash and €1.57bn switch tenders (all of which were accepted).

Execution Details 

 On Monday, 5th February, the Hellenic Republic announced its intention to issue a new 7-year eurodenominated RegS/144a benchmark via Barclays, BNP Paribas, Citi, JP Morgan, and Nomura, to be launched in the near future. 

 The onset of equity market volatility in the US soon after the announcement resulted in the group monitoring markets for the optimal opportunity to launch the new bond into a set of conditions with few distractions for investors. 

 Just before 9:00 GMT on Thursday, 8th February, initial price thoughts were released in the 3.75% area.

  Indications of interest grew and were in excess of €6 billion (including €300mm in JLM interest) when books opened just after 11:20 GMT, with guidance revised to the 3.5%/3.625% area

.  Just after 13:30 GMT, the sizeable book and relatively limited price sensitivity of the orders allowed the yield to be set at 3.50%. It was also announced that books globally would be subject at 14:00 GMT. 

 Shortly thereafter at 14:20 GMT, final terms for the transaction were released, with the size set at €3bn and a final orderbook in excess of €6bn (incl. €320mm in JLM interest). 

 Just after 16:30 GMT, the transaction was officially priced at 3.50%, equivalent to a spread of 311.2 basis points over the reference Bund, 0.5% DBR due February 2025.

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