Tag: debt issue

Merlin Raises Issues 12-Year Bonds Worth €300M

12 September 2017 – Expansión

Merlin Properties has returned to the capital market, taking the Socimi‘s visits so far this year to two. Yesterday, it managed to raise €300 million from the issue of 12-year bonds, in an operation for which it offered a coupon of 2.375%

To effectively manage the placement, Merlin engaged the services of Morgan Stanley. The issuance received robust demand, which allowed the firm to reduce the cost from 150 basis points above mid-swap (the reference rate for the placement of fixed income bonds in euros) considered initially, to 140 basis points above mid-swap.

This is the fifth issue that Merlin Properties has undertaken since its constitution. The first three, for a cumulative sum of €2,350 million, were carried out in 2016. This year, the Socimi has already raised €900 million.

According to the company, the funds raised will be used to early repay its mortgage debt, as well as for “general corporate purposes”. Merlin is the fourth non-financial company to resort to the debt market after Telefónica, Iberdrola and Cortefiel.

Original story: Expansión (by A. Stumpf)

Translation: Carmel Drake

Merlin Issues Debt Amounting To €600M, Redeemable In 2025

18 May 2017 – Expansión

Debt issues in Spain, which have been the focus of the financial sector in recent times, have now reached Merlin Properties. The Socimi has placed debt amounting to €600 million, with a term of eight years (maturing in May 2025) at a price of 99.417% of the nominal value and with an annual coupon of 1.75% (125 basis points above midswap). The subscription and disbursement of the issue will take place on 26 May 2017.

Merlin has received requests amounting to €1,200 million for the issue, i.e. double the amount that will be awarded. This level of demand has allowed it to lower the cost of the operation.

Initially, the Socimi proposed a price of 135 basis points above the reference index for fixed income or midswap issues. But, the strength of demand reduced that premium to 125 points.

To carry out the operation, Merlin has engaged the services of Crédit Agricole, Nabca IMI, Goldman Sachs, ING and JPMorgan.

At the Socimi’s General Shareholders’ Meeting three weeks ago, the CEO, Ismael Clemente (pictured above), confirmed plans to resort to the debt markets, although at the time he was unsure as to whether it would do so through convertible debt or senior debt issues, or by refinancing the bank debt.

The last few weeks have reinforced the truce in the debt market in Europe, after Emmanuel Macron secured victory over Marine Le Pen in the French elections.

Original story: Expansión

Translation: Carmel Drake

Sabadell Places €1,000M In 10-Year Mortgage Bonds

20 April 2017 – Expansión

It has taken Sabadell just four months to debut on the debt market this year. Yesterday, it completed the placement of €1,000 million in mortgage bonds with a maturity of 10 years, to leave Popular as the only entity that, given the uncertainty surrounding its specific situation, has not resorted to the capital markets to raise finance or secure resources for its capital buffer.

For these bonds, Sabadell is offering a coupon of 1%, in other words, 33 basis points above the mid-swap rate, the reference rate for issuances of fixed income securities in euros. The mortgage bonds are the safest debt that an entity can issue, given that, in Spain, they are guaranteed by all of the mortgage loans of the issuing bank, which serve as collateral in the event of bankruptcy. There has never been a default of this kind in Spain.

To carry out the operation, Sabadell has received help from Barclays, Commerzbank, Crédit Agricole, Lloyds and Natixis, as well as from its own investment banking team. Demand for the bond issue amounted to €2,400 million, in other words, more than twice the amount awarded.

Santander Totta

Meanwhile, Santander Totta, the Portuguese subsidiary of Santander, launched an order yesterday to place 7- and 10-year mortgage bonds. According to sources in the market, the operation will close tomorrow and will serve to raise cheap financing. Besides Santander, the following entities are participating in that operation: Unicredit, Deutsche Bank and Société Générale.

Original story: Expansión (by A. Stumpf)

Translation: Carmel Drake

Hispania Completes Its Socimi-Conversion Process

21 June 2016 – El Mundo

Hispania, in which George Soros holds a stake, has completed its conversion into a Socimi by merging with one of its subsidiaries, which was already operating under that company structure.

The firm has concluded this internal reorganisation just days after it completed a €230 million capital increase, which it undertook to raise funds to finance new investments.

Hispania has completed its conversion into a Socimi, a decision approved at its last General Shareholders’ Meeting, by signing a public deed that officially merges the two companies in the Commercial Registry, according to a statement to Spain’s National Securities and Exchange Commission (CNMV).

Until now, the company was a listed real estate company; and one of its subsidiaries operated under the Socimi structure and carried out the majority of its operations. Thus, with this operation, Hispania has reorganised its company structure by integrating several subsidiary companies and converting its parent company into a Socimi. The merger will take effect from 2017 for accounting purposes.

Investments

After completing these two operations, the Socimi plans to invest around €400 million over the next “nine or ten months” in new assets to grow its real estate portfolio. It acquired several hotel assets a few days ago.

Nevertheless, Hispania is ruling out buying any new homes for rent, given the narrow profit margin that it considers those assets offer in comparison with others. As such, the company will place its focus on the office and hotel markets.

Residential properties already account for around 12% of Hispania’s existing real estate portfolio, which was valued at €1,463 million at the end of last year.

Original story: El Mundo

Translation: Carmel Drake

Sareb Refinances Half Of Its Debt To Reduce Its Interest Payments

9 March 2016 – Expansión

Sareb has reduced its financial burden by refinancing half of its debt in just two months. The bad bank is taking advantage of the historically low interest rates to save itself €150 million in interest payments, a key reduction at a complex time for the entity. In addition, the entity chaired by Jaime Echegoyen is finalising the repayment of debt amounting to around €2,000 million, in line with its objectives.

On 18 December 2015, Sareb launched a debt issue amounting to €10,268 million, with a one year term, and a further €6,574 million with a three year term. And two weeks ago, it closed another two operations amounting to €4,084 million and €2,537 million, also with one- and three-year terms, respectively. In total, these sums account for €22,565 million of its debt balance, which currently amounts to almost €45,000 million.

As a result, Sareb is going to see a sharp reduction in its financing costs, which, according to financial sources, will amount to almost €150 million.

In this way, the company’s financing cost will decrease from €1,100 million in 2013 to its current figure of close to €550 million.

In addition, sources close to Sareb’s Board of Directors indicate that this reduction will allow the entity to continue repaying its debt, between €2,000 million and €2,500 million to be specific. They expect that the firm chaired by Jaime Echegoyen will publish its annual accounts for 2015 at the end of this month, which will reflect some of this reduction in costs. During the first half of 2015, the significant cut in interest rates, thanks to the measures implemented by the European Central Bank (ECB), pushed financing costs down to €360 million, i.e. €194 million less than a year earlier.

A balm

The decrease in Euribor has served as a balm for Sareb in the face of the (temporary) suspension in real estate sales in 2015 – due to the migration of its assets – and the impact of the new accounting circular, which is going to force it to exchange two thirds of the subordinated debt that its shareholders hold. Before this new accounting standard, Sareb had already accumulated losses of €850 million during the first three years of its life.

Sareb was created in 2012 with debt of more than €50,000 million, which was granted to the ceding entities as payment for the transfer of their assets. These issues were placed over terms of 1, 2 and 3 years, and were linked to 3-month Euribor plus a spread.

The company launched its first bond issue at the end of 2012. It placed €16,512.6 million at 3-month Euribor plus a spread of 256.2 basis points. For the issues completed in February, that margin had decreased to less than 30 basis points above the same reference rate. In addition, Euribor is now in negative territory, even on a 12-month term. The 3-month reference rate for issues by the company amounts to -0.21% Even if this reference rate continues to fall, negative interest rates will never be applied by Sareb. (…).

The cut in the financing cost would have been greater if it wasn’t for an interest rate hedging instrument that Sareb took out for a 9-year term to cover 80% of those senior debt issues. (…). .

Original story: Expansión (by D. Badía and J. Zuloaga)

Translation: Carmel Drake

BBVA Places €1,250M 7-Year Mortgage Bond Issue

9 March 2016 – Cinco Días

On Tuesday, BBVA launched a 7-year mortgage bond issue, amounting to €1,250 million, at a price of 52 basis points above the mid swap rate, the reference rate for this kind of placement.

The operation was well received, with demand amounting to €2,700 million, according to market sources. That drove down the price from 60 basis points first thing, to the aforementioned spread of 52 basis points above the reference rate. The figure represents the cheapest price at which any Spanish bank has placed debt so far this year.

By geography, 41% of the debt was placed with German and Austrian investors; 18% was placed with Spanish investors; 10% with Norwegian investors; 9% with investors from France and the Benelux countries (Belgium, the Netherlands and Luxembourg) and 8% with Italian investors.

In addition, another 4% of the debt was placed with investors in Europe; another 3% in the UK and Ireland; and another 2% in Switzerland. By type of investor, the main buyers were central banks and official bodies (37%); followed by fund managers (27%); insurance companies and pension funds (18%) and banks (17%).

The banks that acted as the underwriters of this debt issue were BBVA itself, as well as Citigroup, Crédit Agricole, Lloyds Bank and Sociètè Gènèrale.

BBVA already issued €1,000 million in 5-year mortgage bonds during the first few days of the year. This type of issue has been very popular in recent times. Also in January, Bankia issued €1,000 million in 5-year bonds; Santander placed €1,000 million in 10-year bonds; and the Spanish subsidiary of Deutsche Bank issued €500 million in 7-year bonds.

Meanwhile, CaixaBank issued another €1,500 million in 7-year bonds at the beginning of February and Banco Popular followed suit later that month with the issue of €1,500 million in 7-year bonds.

Original story: Cinco Días

Translation: Carmel Drake

CaixaBank Launches €1,000M 5-Year Bond Issue

5 November 2015 – Expansión

The financial sector is issuing debt once again, with the launch of five-year mortgage bonds by the Catalan entity CaixaBank. Yesterday, the bank issued bonds amounting to €1,000 million after receiving demand for almost €1,900 million, which allowed it to reduce the price of the operation. Thus, the debt placement closed at 43 basis points above the mid-swap rate, the reference index for this kind of operation. The initial price ranged between 45 and 47 basis points.

“The strength of the demand has allowed us to narrow the initial spread by almost 4 basis points, placing the coupon at 0.625%”, said CaixaBank yesterday. 72% of the demand came from international investors, from 20 countries. The entity already issued another €1,000 million of mortgage bonds during the first quarter of the year; in that case the bonds had a ten-year term. CaixaBank, Crédit Agricole, Credit Suisse, HSBC and Deutsche Bank were the underwriting banks.

Original story: Expansión

Translation: Carmel Drake

Sabadell Launches €1,000M 5-Year Bond Issue

28 October 2015 – Cinco Días

Banco Sabadell has issued 5-year mortgage bonds amounting to €1,000 million, with a coupon of 0.625%, after applying 0.48 percentage points to the midswap index (the interest rate on risk-free money over a certain period). Commerzbank, Goldman Sachs, Lloyds Bank and Société Générale were the underwriters of the issue.

Sabadell initially planned to place €750 million, but requests were received for €1,500 million, and so the company decided to increase the volume. Sources close to the placement also highlight the quality of the orders.

The requests have been made by more than 80 international investors. Sources at the underwriting banks explain that Sabadell has become “the first bank in the south of Europe capable of undertaking an issue amounting to €1,000 million; in recent weeks, the maximum size has been €750 million”.

This bond issue comes a week after Cajamar completed its own debt issue, also placing 5-year mortgage bonds. That issue amounted to €750 million, whereby exceeding its initial objective of €500 million.

Cajamar set the placement price of the issue at 80 basis points above the midswap index (the benchmark rate for long-term issues) to offer a fixed annual coupon of 1% and a yield for investors of 1.22%. The underwriters in that case were Santander, JP Morgan, Natixis, Nomura and Deutsche Bank.

Original story: Cinco Días

Translation: Carmel Drake

Saint Croix Socimi To Debut On The MARF

1 October 2015 – Expansión

The Socimi Sainx Croix, owned by the Colomer family, registered its first fixed income program yesterday, for up to €80 million on the Alternative Fixed Income Market (‘Mercado Alternativo de Renta Fija’ or MARF), a financing option launched by the Government in 2013 to facilitate SMEs’ access to capital markets. In this way, Saint Croix became the first Socimi to turn to this market in search of financing.

According to a statement by the BME yesterday, Saint Croix plans to allocate the funds that it will raise through this bond issue to the acquisition of new assets and the maintenance of existing assets in its current portfolio.

Renta 4 coordinated the management and structuring of the plan and will act as the underwriter for the bond issues that are carried out. Axesor Ratings has assigned the issuer a BBB rating with a stable outlook, in other words, it is classified it as investment grade. Ramón y Cajal Abogados was engaged to provide legal advice for the design and registration of the program.

Saint Croix Holding, which relocated its headquarters to Luxembourg from Spain in 2014, owns 150,000 m2 of rentable space, with a total value of €284 million as at 30 June 2015. Its assets include several hotels, located in Huelva and Madrid, as well as the headquarters of CLH. The Socimi’s owners, the Colomer family, also own the real estate company Pryconsa.

The Socimi has included an explicit warning to investors in the bond issue brochure, about the political risks in Spain, making a clear reference to Cataluña (see page 32).

MARF

This  is a new debut for the MARF. In total, according to data from the BME, thirteen companies have decided to issue bonds through this market. Copasa, Pikolin, Tecnocom and Barceló are a few of the companies that have already successfully launched operations on this market.

Original story: Expansión (by D.B., M.S. and R.R.)

Translation: Carmel Drake

Sabadell Places €750M 5-Yr Debt Issue At 0.475%

1 June 2015 – Expansión

€750 million debt issue / The bank has placed an issue of 5-year mortgage bonds with a record low yield of 0.475%.

For many financial institutions, the excess liquidity in the market is offsetting the recent increase in volatility that has resulted from the lack of agreement between Brussels and Greece. As a result, debt issues are proving successful.

Friday’s operation by Sabadell is a good example. Just 24 hours after the bank held its AGM, it went to the market in search of financing through the issue of 5-year mortgage bonds, arranged by Barclays, Deutsche Bank, HSBC and Lloyds. It paid a yield of 0.475%, which represents the lowest ever interest rate on a bond issue. Moreover, spreads, or differentials, are returning to pre-crisis levels, given that this yield sits just 12 basis points above the mid-swap rate (the reference rate for fixed rate issues).

“The primary international investors have all taken part in this operation and the participation rate in Germany has been particularly noteworthy. The main investors participating in the issue have been financial institutions, central banks, investment fund managers, insurance companies and pension funds”, said the entity in a statement on Friday.

Balance sheet

Sabadell has been particularly active in the market for this type of issue. Since November last year, it has completed four such transactions, raising €3,100 million in total. “The solvency of Banco Sabadell and its reputation on the international financial markets have undoubtedly been the factors that have contributed to the success of this placement”, it added. The bank wants to take advantage of the decreasing financing costs caused by the recent stimulus measures put in place by the European Central Bank (ECB). “The release of this issue will take place on 10 June and its launch forms part of Banco Sabadell’s non-equity security program, filed with the CNMV”, explain sources at the bank.

In September last year, the financial institution launched a covered bond (the term used for bonds in Europe) purchase program. In total, it has acquired €82,805 million. Moreover, it put in place a securitisation purchase program at the end of last year, and as a result it will close the first transaction involving Spanish mortgages since 2007, with UCI, which is owned by Santander and BNP Paribas. And in March this year, it started to purchase government debt, which has significantly reduced its financing costs.

Improved credit

As a result, credit is being revived once more, which is the main objective of the ECB. In this regard, Josep Oliu, Chairman of Sabadell (pictured above), said at the entity’s AGM last Thursday, that the strong level of competition in the financial markets to secure credit in the context of excess liquidity, represents a threat to the recovery of the banks’ financial results.

Original story: Expansión (by D. Badía)

Translation: Carmel Drake