Summary Terms
Issuer: European Bank for Reconstruction and Development ("EBRD")
Issue Rating: Aaa/AAA/AAA, all stable (Moody’s / S&P/ Fitch)
Format: Global (SEC Exempt)
Issue amount: USD 1.5 billion
Pricing date: 30 June 2020
Payment Date: 10 July 2020 (T+7)
Maturity: 10 July 2023
Coupon: 0.250% (semi-annual)
Re‐offer Price: 99.890%
Re‐offer Yield: 0.287% (semi-annual)
Re‐offer vs. Mid-swap: +7bps
Re‐offer vs. UST: +12.15bps
Denominations: USD 1,000 and increments of USD 1,000 thereof
Joint-lead Managers: BMO, Citi, HSBC, Morgan Stanley
Transaction Highlights
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On Tuesday 30th June 2020, the EBRD priced a new USD 1.5 billion 3-year note due 10th July 2023 via BMO, Citi, HSBC and Morgan Stanley.
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The benchmark transaction priced flat to fair value, at a spread of mid-swaps +7bps, equivalent to a +12.15bps spread over the on-the-run 3-year US Treasury. The transaction marks the tightest 3-year SSA print to mid-swaps since mid-February and the tightest print to US Treasuries since mid-March.
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The final orderbook attracted over USD 1.7 billion in demand from 45 investors located in a diverse range of geographies.
- The bond proceeds will be utilised for general capital purposes, which will include EBRD's response to the COVID-19 pandemic. EBRD has announced a comprehensive EUR 21 billion Solidarity Package of response and recovery measures for 2020-2021, which includes a EUR 4 billion Resilience Framework.
Execution Process
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The EBRD took advantage of a quiet primary market to announce the mandate for a USD 1 billion 3-year Global Benchmark at 2.20pm London time on Monday 29th June, with Initial Price Thoughts (“IPTs”) of ms+7bps area.
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The announcement was met with demand from high quality investors and indications of interest had reached in excess of USD 775 million, when book were opened at 8.00am London time the following morning. Spread was simultaneously set at ms+7bps, in line with IPTs.
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The clarity provided by setting the spread further propagated the strong momentum from investors, with books reaching in excess of USD 1 billion within half an hour of books opening, and subsequently to over USD 1.5 billion by 9.45am London time. At this point EMEA and Asia books were set to close at 11.00am London time.
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US books closed at 9.00am New York / 2.00pm London time, with the final orderbook in excess of USD 1.7 billion, enabling the EBRD to comfortably upsize the transaction to USD 1.5 billion.
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The bond priced at 4.45pm London time paying a semi-annual coupon of 0.250% with re-offer price of 99.890%, and a semi-annual yield of 0.287%.
- The high quality orderbook saw 41% of bonds allocated to central banks & official institutions, with banks taking a further 39%. Pension funds, insurance and other investors were allocated 13% of the deal size, and asset managers took the remaining 7%. The transaction was well diversified in terms of geography, with investors in EMEA taking 37% of allocations, followed by Asia (33%) and the Americas (30%).