Successful second USD benchmark issue

The Bank’s USD 1 billion global, with a maturity of five years, re-opened the USD market for supranational issuers following a three-week issuance moratorium due to the highly anticipated September meeting of the US Federal Reserve.

In the weeks prior to the transaction, uncertainty about future interest rates and concerns about economic growth in Asia had made the market wary. This situation meant that finding the right starting point for pricing was decisive, as was the timing.

“We were carefully observing the market for some time. It was not, however, until the US Federal Reserve meeting that we saw an opportunity for a new issues market and quickly decided to use this window”, says Jens Hellerup, Head of Funding and Investor Relations at NIB.

“Within 20 minutes after the initial price indications were sent to the market on Monday 21 September, we had interest from investors for about USD 750 million, and that had built to over USD 1.2 billion by the time the order books were officially opened the next morning. At the end, there might have been a possibility to get an even tighter price on fully subscribed order books. We feared, however, this would jeopardise the secondary market performance, so we didn’t go for the last basis point.”

The final book contained orders for USD 1.8 billion, with 45 investors participating in the transaction. Bank treasuries accounted for the largest share of demand: 52 per cent. There was strong interest from central banks and official institutions as well: 35 per cent. Geographical distribution was spread across all major centres, with EMEA accounting for 56 per cent, the Americas for 34 per cent and Asia Pacific for 10 per cent.

This view is shared by Keith Price, Head of SSA Syndicate at J.P. Morgan, one of the banks involved in the USD global transaction:

“This was a resounding re-opening of the market after the Federal Reserve meeting at a time when market strength is not a given. NIB has achieved a very strong book in terms of size and quality with a minimal new issue premium. NIB’s reputation remains as strong as ever.”

For more details on the transaction, read a press release.