On Tuesday 23rd June 2020, MuniFin (Aa1/AA+) priced a new USD 1 billion long 3-year fixed rate RegS/144A bond; jointly lead managed by Deutsche Bank, JP Morgan, RBC Capital Markets and TD Securities. This marks the tightest Agency 3-year USD benchmark issued since the pandemic started.
MuniFin took advantage of the favourable market condition to announce the mandate of their first USD benchmark transaction of 2020. This 3-year benchmark follows MuniFin’s successful EUR transactions in January and April. Following the volatile spring, MuniFin was able to deftly identify an open issuance window and gather an impressive order book of the highest quality.
The transaction was announced to the market at 13 pm London time on Monday 22nd June 2020, with investors invited to reflect Indications of Interest (IOIs) for a USD benchmark transaction. Initial Price Thoughts – IPTs – of MS+19bps area were released in tandem, representing a marginal new issue concession to fair value.
The investor response throughout the European afternoon and overnight US sessions was strong, with IOIs exceeding USD 2.1bn by the London open on Tuesday 23rd June. Due to the quality of the order book, price guidance was revised by 2bp to MS+17bps area. Momentum continued throughout the London morning reaching USD 2.8bn (Excluding Join Lead Manager interest). At this stage, the decision was taken to tighten and set the spread at MS+16bps in order to provide clarity to investors.
Given the USD1bn capped deal size and in order to limit further order book growth, it was decided that books would go subject just twenty minutes later at 9.30am London time.
The bond priced with a final spread to the 3yr US Treasury of 21.1 bps which represents for a 3y USD benchmark the tightest MS spread for an Agency issuer in 2020. Despite this, the demand from the Official Institution and Central Bank community was significant at 68%. In terms of geographical distribution, the bond was evenly distributed across EMEA, Americas and Asian-based investors alike.
MuniFin has funding requirement of EUR 9.5bn for 2020 and after this transaction MuniFin has completed EUR 6.4bn of the funding for the year.
“MuniFin showed skill this week by feeling the excellent market conditions and accelerating a project that would perhaps otherwise have been scheduled for next month. The timing of the announcement yesterday proved on point thus attracting the biggest ever USD IOI book for MuniFin and a very successful transaction overall which confirms MuniFin’s high reactionary stature among its peers.”
Jonas Ulrich, Director, SSA DCM, Deutsche Bank
“A fantastic outcome for MuniFin, taking advantage of favourable conditions to price the tightest 3-year USD benchmark versus MS from a European agency since the pandemic outbreak. The high quality of orders that reached one of the issuer’s record book sizes is proof of MuniFin’s strong recognition with global investors.”
Angelica-Maria Strolz, Executive Director, SSA DCM, J.P. Morgan
“A fantastic transaction by MuniFin for their first USD benchmark of 2020. Attracting demand in excess of $2.8bn whilst also pricing through their outstanding USD curve is a clear testament to the unique qualities of their credit, along with the strong following that MuniFin enjoys across the global investor base. Congratulations to the whole team!”
Stuart McGregor, Managing Director, SSA Syndicate, RBCCM
“We applaud MuniFin on a truly excellent return to the USD market, in what was a flawlessly executed and well timed transaction. By taking advantage of a clear issuance window, MuniFin ensured full investor focus on their transaction and it paid off; with an order book dominated by high quality Central Banks and Bank Treasuries.”
Laura Quinn, Head of Origination, TD Securities
|Issuer||Municipality Finance Plc (“MuniFin”)|
|Rating||Aa1/AA+ (all stable)|
|Issue size||USD 1.0 billion|
|Settlement date||1 July 2020 (T+6)|
|Maturity date||1 September 2023|
|Coupon||0.375% payable semi-annually|
|Re-offer vs benchmark||T 0.25% June/23 + 21.1bps|
|Re-offer vs mid-swaps||+16bps|
|Lead managers||Deutsche Bank, J.P. Morgan, RBC Capital Markets and TD Securities|
|Co-lead managers||HSBC, MUFG Securities EMEA, Mizuho Securities, SMBC Nikko|
Head of Funding, MuniFin
Tel. +358 50 3700 285
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