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Transaction Summary:
Issuer: European Bank for Reconstruction and Development (EBRD)
Format: Global (SEC Exempt)
Amount: USD 2 billion
Settlement date: 9 March 2023
Maturity date: 9 March 2028
Spread: SOFR MS+31 basis points
Coupon: 4.375% semi-annual
Coupon Payment Dates: 9 March and 9 September each year commencing 9 September 2023, up to and including the Maturity Date
Listing: London Stock Exchange’s Regulated Market
Joint-Lead Managers: Daiwa Capital Market Europe Ltd, J.P. Morgan Securities Plc, Goldman Sachs International, TD Securities
On Thursday 2nd March 2023, European Bank for Reconstruction and Development (EBRD), rated Aaa/AAA/AAA (M/S/F), priced a USD 2 billion 5-year senior unsecured benchmark at SOFR Mid Swaps plus 31 basis points from Initial Price Thoughts (“IPTs”) of SOFR Mid Swaps plus 35 basis points area, and Guidance of SOFR Mid Swaps plus 33 basis points area. The transaction priced with a new issue concession of 1 basis point.
The successful transaction represents EBRD’s first USD fixed rate benchmark in over two years. EBRD last launched a USD 2bn 5-year fixed rate benchmark in January 2021. For 2023, EBRD communicated a Borrowing Programme of up to €10 billion which includes funding needs of €8 billion and €2 billion of potential pre-funding of the 2024 Borrowing Programme.
The issue carries a semi-annual coupon of 4.375% and will mature on 9th March 2028. It was priced with a spread of 13.94 basis points over the CT5 Treasury note, equivalent to SOFR Mid Swaps plus 31 basis points. The pricing translates to a re-offer yield of 4.467%.
The mandate was announced on Wednesday 1st March at 1pm UKT with IPTs of SOFR Mid Swaps plus 35 basis points area for a 5-year USD benchmark.
On the back of very strong indications of interest (“IOIs”) that were in excess of USD 3 billion, which represented EBRD’s largest ever IOIs, the book officially opened on Thursday 2nd March at around 8am UKT, with price guidance of SOFR Mid Swaps plus 33 basis points area, 2 basis points tighter than IPTs.
The announcement of IOIs and Official Price Guidance generated further momentum and by 9.30am UKT the order book was already in excess of USD 4.25 billion (excl. JLM interest). Given the size and quality of the order book, the decision was taken to fix the spread a further 2 basis points tighter at SOFR Mid Swaps plus 31 basis points. The order book continued to grow and by 12.15 UKT was in excess of $5bn (including $100mm JLM interest). The transaction ended up more than 2.6 times oversubscribed with a final book size in excess of USD 5.2 billion, and represents EBRD’s largest ever order book.
The transaction attracted significant demand from global Central Banks / Official Institutions who took 60% of allocation. Geographically the distribution was diverse across EMEA (45%), Americas (29%) and Asia (26%). In total over 120 investors participated in the transaction.
This transaction was joint-lead managed by Daiwa, JP Morgan, Goldman Sachs and TD Securities.