On Wednesday, 28th February 2018, the European Bank for Reconstruction and Development (EBRD), rated Aaa (Moody’s) / AAA (S&P) / AAA (Fitch), launched and priced a new US$1.5bn 5-year Global benchmark transaction due 7 March 2023.
The new 5-year issue is the EBRD’s first USD Global benchmark transaction this year, and the first 5-year benchmark this year to print at a spread to mid-swap in the single digits, representing the tightest print to swap in this part of the curve so far this year.
With this transaction the EBRD has also extended its curve out to 2023, injecting new liquidity in the intermediate sector with a new 5-year benchmark.
Following the launch, the EBRD has now completed roughly 34% of their 2018 funding programme of up to €8bn.
Issuer: European Bank for Reconstruction & Development (EBRD)
Rating: Aaa(Moody’s) /AAA(S&P) /AAA(Fitch)
Issue amount: USD1.5 billion
Pricing Date: 28 February 2018
Settlement Date:7 March 2018
Coupon: 2.750% Fixed, SA 30/360
Maturity: 7 March 2023
Reoffer Price: 99.579%
Reoffer Yield: 2.841%
Reoffer vs. Mid-Swaps: +7.0 bps
Reoffer vs Benchmark: CT52.625% Feb 2023+18.05bps
Lead Managers: BMO, Citi, Goldman Sachs International, and TD Securities
BMO, Citi, Goldman Sachs International and TD Securities were mandated as joint lead managers on the transaction.
EBRD decided to take advantage of the supportive market backdrop for issuance, exploiting a constructive window in between volatile conditions and following the widening in swap spreads.
The mandate for a new 5-year USD Global benchmark was announced on Tuesday, 27th February 2018, at 3:00pm London and IPTs of MS+9bps area were released simultaneously for gathering IOIs overnight.
The deal was met with immediate investor interest and with IOIs in excess of US$1bn (excluding JLM interest), the books were officially opened in the European morning on Wednesday at 8:30am London with a price guidance of MS+8bps area, 1bp tighter than IPTs.
Momentum continued to build throughout the European morning, with books reaching in excess of US$1.75bn (excl. JLM interest) by 12:00pmLondon, allowing the issuer to further tighten the price guidance by 1bp and set the spread at MS+7bps, with global books going subject at 2:00pm London.
On the back of extremely high quality orders and with final demand in excess of US$1.8bn (excl. JLM interest), the issuer decided to set the deal size at US$1.5bn.
The deal was priced at 4:21pm London with a re-offer yield of 2.841%, equivalent to a spread of 18.05bps vs CT5 2.625% Feb 2023.