Commentary & Deal Flow

CFR CREDIT CLOSE: Eclectic Mix Puts Week at $11.800bn

January 12, 2021

Supply this week is steady, with $6.4bn priced today and $5.4bn priced on Monday leaving the current total at $11.80bn. Assuming this pace continues, all signs seem to point to the lower end of the estimate range ($31.375bn avg est - $20bn low/$42bn high).

Aviation Capital ended up repricing its curve today, printing a $750m 5yr10bp inside the guidance range with a negative 22.5bp NIC.

BPCE SA was the volume booster of the day, pricing $3bn split between a 5yr sr preferred and an 11nc10 sr NON preferred.

Pacific Life joined the flurry of 2021 FA-bkd trades (including PacLife today, 9 FA-bkd trades have hit in 2021 for a total of $8.15bn), but opted to go for an off-the run 7yr.

STATS:

Here’s today’s rundown:

[BPCE SA]

BPCE SA “BPCEGP” hit the market today with a $3bn 144A/Reg S 2-part UOP: gcp. Settle 1/20 (T+5).
- US$ benchmark 5y Senior Preferred Notes due 1/20/26. Exp A1/A+/A+ (s/n/n). IPTs: T+85 area.
- US$ benchmark 11nc10 Senior Non-Preferred fixed to float due 1/20/32. Exp Baa2/A-/A (s/n/n). Callable 1/20/31. SOFR back-end. IPTs: T+145 area.

VIA via BofA/Barc/Citi (B&D)/GS/Natix/SCB/UBS joint books.

Announced overnight as benchmark, the final size came in at $3bn with price progression as follows:

- US$1.75bn 5y Senior Preferred due 1/20/26. Exp A1/A+/A+ (s/n/n). IPTs: T+85 area. LAUNCHED: $1.75bn at T+60.
- US$1.25bn 11nc10 Senior Non-Preferred fixed to float due 1/20/32. Exp Baa2/A-/A (s/n/n). Callable 1/20/31. SOFR back-end. IPTs: T+145 area. LAUNCHED: $1.25bn 11nc10 at T+115.

PRICED:
$1.75bn 1.00% 1/20/26 99.539 1.995% T+60.
$1.25bn 2.277% 1/20/31 100.00 2.277% T+115. Back-end: SOFR+131.2.

As for r/v comps on the 5yr senior preferred included:

BPCE SA sr pfd (A1/A+/A+)
- BPCEGP 4.000% due 04/15/24 T+45bp (G40; $110.66) - $1.5bn pxd Apr 2014

Credit Agricole London sr pfd (Aa3/A+/AA-)
- ACAFP 2.375% due 01/22/25 T+40bp (G54; $105.70) - $472bn outstanding ($1bn pxd Oct 2019)

Banque Federative du Credit Mutuel sr pfd (Aa3/A/AA-)
- BFCM 2.375% due 11/21/24 T+60bp (G46; $105.85) - $500m pxd Nov 2019

Societe Generale (A1/A/A)
- SOCGEN 1.375% due 07/08/25 T+52bp (G59; $101.42) - $500m pxd 6/30/20 +115

Outstanding BPCEGP old, but adding in a 20bp 3s/5s curve puts you right at T+60bp. 5YR SR PREFERRED CONCESSION FLAT.

Comps on the 11nc10 SNP included the following:

BPCE SA sr non pfd (Baa2/A-/A)
- BPCEGP 1.652% due 10/06/26 (NC 25) T+82bp (G85; $101.39) - $1.35bn pxd 9/29/20 +140

Credit Agricole sr non pfd (Baa1/A-/A+)
- ACAFP 1.907% due 06/16/26 (NC 25) T+70bp (G77; $102.92) - $1.5bn pxd 6/9/20 +150

BNP Paribas sr non pfd (Baa1/A-)
- BNP 1.323% due 01/13/27 (NC 26) T+82bp (G82; $99.91) - $2.25bn pxd 01/06/21 +90bp
- BNP 3.052% due 01/13/31 (NC 30) T+106bp (G115; $106.69) - $2.00bn pxd 01/06/21 T+125bp

The recent BNP trade currently sports a 6nc5/11nc10 curve curve of 33bp. Adding that to the BPCEGP 26nc25 at G85 puts you at T+118bp. Adding in a couple more basis points (basically a 35bp curve) puts you at T+120bp. At the T+115bp pricing level, THE 11NC10 SNP CONCESSION IS NEG 5BP.

Final book size was heard as:

$1.75bn 5yr sr pfd - $3.5bn
$1.25bn 11nc10 SNP - $3.9bn

[AVIATION CAPITAL]

Aviation Capital Group LLC “ACGCAP” (Baa2/BBB- n/n) hit the market today with US$750m 144A/Reg S no reg rights 5y sr notes due 1/30/26. MWC then 1mo par call. 101 CoC. Covenants: Liens on assets, restrictions on mergers and sales of assets. UOP: GCP, which may include, the purchase of commercial aircraft and the repayment of outstanding indebtedness. Settle 1/15 (T+3).

VIA BNP/Citi (B&D)/DB/Miz/RBC joint active books.

Announced as benchmark size, we heard initial thoughts as 212.5a.

Official guidance came in at 180a +/- 5

Ultimately, a $750m deal priced 10BP INSIDE THE TIGHT END OF THE GUIDANCE RANGE at T+165bp.

PRICED: $750m 1.95% 1/30/26 99.044 2.151% T+165.

As for r/v, outstanding Aviation Capital was quoted as follows:
- ACGCAP 4.375% due 01/30/24 T+200bp (G199; $106.15) - $300m pxd Nov 2018
- ACGCAP 5.500% due 12/15/24 T+190bp (G177; $111.45) - $1bn pxd 7/7/20 +545.9
- ACGCAP 4.125% due 08/01/25 T+219bp (G227; $105.80) - $500m pxd Jul 2018
- ACGCAP 3.500% due 11/01/27 T+279bp (G254; $101.08) - $750m pxd Oct 2017

Going off the most recent Dec ‘24s at G177, sources felt adding in some curve and taking off a smidge for the dollar price got you to around T+187.5bp f/v. At the T+165bp pricing level, CONCESSION IS NEG 22.5BP.

Bottom line though, today’s deal was essentially a repricing of the curve.

Comps away:

Air Lease Corp (BBB/BBB)
- AL 2.875% due 01/15/26 T+127bp (G128; $105.08) - $1.45bn pxd 8/10/20 +285

AerCap Ireland (Baa3/BBB/BBB-)
- AER 1.750% due 01/30/26 T+152bp (G151; $98.60) - $1bn pxd 1/6/21 T+155

Avolon Holdings (Baa3/BBB-)
- AVOL 4.250% due 04/15/26 T+226bp (G222; $107.19) - $1bn pxd 11/16/20 +385 (this deal pxd with a neg 30bp NIC).

Aircastle Ltd (Baa3/BBB-/BBB)
- AYR 4.250% due 06/15/26 T+245bp (G240; $106.30 ) - $650m pxd Jun 2019

Final book size was heard as $3bn.

[PACIFIC LIFE GLOBAL FUNDING II]

Pacific Life Global Funding II “PACLIF” (A1/AA-/AA- p/s/s) hit the market today with US$600m 144A/Reg S no reg rights 7y sr secured FA-Backed notes due 1/20/28. FA Provider: Pacific Life Insurance Company. UOP: purchase a Funding Agreement from Pacific Life Insurance Company. Settle 1/20 (T+5).

VIA CS/DB/GS (B&D)/JPM joint active books.

Announced as benchmark size, we heard initial thoughts as T+80a.

Official guidance emerged at T+62#.

Ultimately, a $600m deal priced as follows:

PRICED: $600m 1.45% 1/20/28 99.960 1.456% T+62.

As for r/v, outstanding PACLIF was quoted as follows:

PACLIF 1.200% due 06/24/25 T+47bp (G54; $100.92) - $600m pxd 6/17/20 +90bp.

Looking at the PFG 5s/10s curve below (22bp), you could argue at least an 11bp 5s/7s curve. Adding that to G54 on the PACLIF Jun 25s takes you to T+65bp f/v. At the T+62bp pricing level, CONCESSION IS NEG 3BP.

Principal Life Global Funding (A1/A+)
- PFG 0.875% due 01/12/26 T+51bp (G51; $99.30) - $550m pxd 1/5/21 T+52bp
- PFG 1.625% due 11/19/30 T+73bp (G73; $97.74) - $300m pxd 11/12/20 +75

New York Life Global Funding (Aaa/AA+)
NYLIFE 0.850% due 01/15/26 T+35bp (G34; $99.92) - $900m pxd 1/11/21 T+37bp

Northwestern Mutual Global Funding (Aaa/AA+)
- NWMLIC 0.800% due 01/14/26 T+33bp (G32; $99.79) - $750m pxd 1/7/21 +38

Met Life Global Funding I (Aa3/AA-/AA-)
- MET 1.550% due 01/07/31 T+65bp (G64; $97.72) - $750m pxd 1/4/21 +68

Protective Life Global Funding (A1/AA-)
- PL 1.737% due 09/21/30 T+73bp (G75; $98.75) - $600m pxd 9/14/20 +107

Equitable Financial Life (A2/A+)
- EQH 1.400% due 08/27/27 T+90bp (G62; $99.92) - $500m pxd 8/25/20 +95

Final book size was heard as $800m.

[MAIN STREET CAPITAL]

Main Street Capital Corp “MAIN” (BBB- stable S&P) hit the market today with US$300m SEC registered long 5y sr notes due 7/14/26. MWC then 1mo par call. UOP: repayment of debt outstanding under the Credit Facility, and to make investments in accordance with our investment objective. Settle 1/14 (T+2).

Via RBC (B&D)/SMBC/TSI joint active books.

Announced as benchmark size, we heard initial thoughts as T+287.5 area.

Guidance came in at 275a +/- 5.

Ultimately, the $300m deal priced at T+270bp.

PRICED: $300m 3.00% 7/14/26 99.004 3.199% T+270.

As for r/v, outstanding MAIN was quoted as follows:

MAIN 5.200% due 05/01/24 T+230bp (G225; $108.58) - $450m pxd Apr 2019.

Looking at comps away below, the ARCC 06/24 to 07/26 curve is 45bp. The ORCC curve is 50bp. Going mid-point and calling the curve 45bp, adding that to the MAIN ‘24s at G225 puts you right at T+270bp. FLAT CONCESSION.

Comps away:

Ares Capital Corp (Baa3/BBB-/BBB)
- ARCC 4.200% due 06/10/24 T+132bp (G126; $108.59) - $900m pxd Jun 2019
- ARCC 2.150% due 07/15/26 T+180bp (G171; $99.23)

Owl Rock Capital Corp (Baa3/BBB-/BBB-)
- ORCC 5.250% due 04/15/24 T+218bp (G215; $108.65) - $400m pxd Apr 2019
- ORCC 4.250% due 01/15/26 T+269bp (G270; $104.79) - $500m pxd 7/16/20 +412.5
- ORCC 3.400% due 07/15/26 T+274bp (G267; $100.79) - $1bn pxd 12/1/20 +320

Final book size was heard as $550m.

[DUBAI AEROSPACE]

DAE Funding LLC “DUBAEE” (Baa3/NR/BBB-) hit the market today with US$1.25bn 144A/3c7/Reg S 2-part sr notes (4y due 3/20/25 and 7y due 3/20/28). 1mo par call on 4y and 2mos on 7y. Guarantor: Dubai Aerospace Enterprise (DAE) Ltd. List Nasdaq Dubai. English Law. Settle 1/20 (T+5).

VIA GS (B&D)/MS as joint active books.
CACIB/Emirates NBD/FITB/GS/HSBC/JPM/Miz/MS/Natix/TSI as JLMs/JBRs. Co-mgr: DB

IPTs: 4y T+260 area, 7y T+310 area.

UPDATE: 4y spread set at T+230, 7y set at T+275.

PRICED:
$500m 2.625% 3/20/25 99.314 2.801% T+230.
$750m 3.375% 3/20/28 98.711 3.581% T+275.

We have a long list of comps on this one, but did not get direction on whether a NIC call was possible, so we have to go with CONCESSION N/A.

DAE Sukuk DIFC Ltd (Baa3/NR/BBB-)
- DUBAEE 3.750% due 02/15/26 T+258bp (G256; $103.11) - $750m pxd 11/19/20 +349.4
Dubai Government
- DUGB 3.890% due 03/20/25 T+148bp (G159; $107.60)

ICD Funding Ltd
- INVCOR 4.625% due 05/21/24 T+214bp (G208; $107.25) - $500m
- INVCOR 3.223% due 04/28/26 T+252bp (G248; $100.96) - $600m

Air Lease Corp (BBB/BBB)
- AL 3.375% due 07/01/25 T+124bp (G132; $106.87) - $850 pxd 6/17/20 +325
- AL 2.875% due 01/15/26 T+127bp (G128; $105.08) - $1.45bn pxd 8/10/20 +285
- AL 3.625% due 12/01/27 T+179bp (G151; $108.17) - $500m pxd Nov 2017

AerCap Ireland (Baa3/BBB/BBB-)
- AER 3.150% due 02/15/24 T+121bp (G120; $105.03) - $900m pxd 9/23/20 +320
- AER 1.750% due 01/30/26 T+152bp (G151; $98.60) - $1bn pxd 1/6/21 T+155
- AER 4.625% due 10/15/27 T+192bp (G165; $113.33) - $600m pxd 9/23/20 +445

Avolon Holdings (Baa3/BBB-)
- AVOL 4.250% due 04/15/26 T+226bp (G222; $107.19) - $1bn pxd 11/16/20 +385 (this deal pxd with a neg 30bp NIC).
- AVOL 3.250% due 02/15/27 T+251bp (G236; $101.25) - $650m pxd 1/9/20 +150

Final book size was heard as:

$500m 4yr - $1.2bn
$750m 7yr - $1.9bn

[MEXICO REMITTANCES / NUEVA ELEKTRA]

Mexico Remittances Funding Fiduciary Estate (Issuer / SPV), an unregulated securitization fund in the form of a fiduciary estate established under the laws of Luxembourg, exp issue ratings BBB- (Fitch) / BBB+ (HR Ratings), hit the market today with US$500m 144A/Reg S 7y sr secured notes (4.5yr avg life). 2y interest-only period. Originator and Servicer: Nueva Elektra del Milenio, S.A. de C.V. ("NEM") (BB+ by Fitch). Guarantor: Grupo Elektra, S.A.B. de C.V., the parent of the Originator (BB+ by Fitch), will guarantee any Default Payment and Additional Amounts. Amortization: No mandatory amortization during 2yr interest-only period; thereafter, quarterly amortization of 5%. List Lux. NY Law. UOP: (1) make Initial Payment to the Originator for the Issuer’s purchase of the Receivables and (2) to fund the Series 2021-1 Reserve Account in an amount equal to the Series 2021-1 Reserve Account Required Balance. Marketing: https://dealroadshow.com/e/Elektra2021 (Deal Entry Code: Elektra2021). Settle 1/15.

VIA BCP Secs/CS/Jefferies (B&D) JGCs/JBRs.

Announced as benchmark size, we heard initial thoughts as low 5%.

A $500m deal launched at 5%.

PRICED: $500m 4.875% 1/15/28 99.494 5.00%.

This is a debut, so CONCESSION IS N/A.

The following comps were used for relative value:

- United Mexican States (Baa1/BBB/BBB-)

MEX 4.125s of 01/21/26 ($114.50; yld 1.14%; G66) - $3bn pxd Jan ‘16

-Petroleos Mexicanos (Ba2/BBB/BB-)

- PEMEX 4.50s of 01/23/26 ($99.75; yld 4.55%; G407) pxd Jan ’15

- El Puerto de Liverpool (NR/BBB/BBB+)

- LIVEPL 3.875s of 10/06/26 ($108.00; yld 2.37%; G177) - $750m pxd Oct ‘16

- Cemex SAB de Cv (NR/BB/BB-)

- CEMEX 5.20s of 09/17/30 ($109.00; yld (to worst) 3.60%; G315) – $1bn pxd Sept ‘20

- Saci Falabella (NR/BBB/BBB)

BFALA 4.375s of 01/27/25 ($109.00; yld 1.90%; G157) - $400m pxd Oct ‘14

- Cencosud SA (Baa3/NR/BBB-)

- CENSUD 5.15s of 02/12/25 ($112.00; yld 1.89%; G155) - $650m pxd Feb ‘15

- The Western Union Co (Baa2/BBB/NR)

- WU 2.85s of 01/10/25 (107.00; yld 1.02% G67) - $500m pxd Nov ‘19

- B2W Digital Lux Sarl (Ba1/BB/BB)

- BTOWBZ 4.375s of 12/20/30 ($104.00; yld 3.87%; G278) - $500m pxd 11/18/20 at T+350

Final book size was heard as $800m.

[MANDATES & MARKETING]

Nippon Life Insurance Company, rated A1 (negative) by Moody's and A+ (stable) by S&P, has mandated J.P. Morgan, Goldman Sachs, Citigroup and BofA Securities to arrange a series of telephonic investor calls across Asia, Europe and the US commencing on January 12, 2021. A benchmark size offering of US$ 144A / Reg S 30NC10 step-up callable subordinated notes will follow, subject to market conditions. The notes are expected to be rated A3 by Moody’s and A- by S&P. FCA/ICMA stabilization applies.

[SSA PRICINGS]

- Republic of Colombia (COLOM) exp Baa2/BBB-/BBB- US$2.09bn SEC registered 2-part global (tap of 3.125% 4/15/31 sr notes and new 40y sr notes due 2/15/61). MWC then 3mos par call on 2031 tap and 6mos on 40y. CS/DB/JPM (B&D) joint books. List Lux / Euro MTF. NY Law. UOP: (i) in part, for liability management transactions, which may include payment of the purchase price for all or a portion of Colombia’s 4.375% Global Bonds due 2021, 4.000% Global Bonds due 2024, 4.500% Global Bonds due 2026 and 3.875%Global Bonds due 2027, that Colombia may purchase pursuant to its Offer to Purchase dated January 12, 2021 (the “Offer to Purchase”) on the terms and subject to the conditions set forth in the Offer to Purchase, and/or (ii) for general budgetary purposes. Pricing today. Settle 1/22 (T+7).

• IPTs: 2031 tap 2.95% area, new 40y T+230 area.
  GUIDANCE: 2031 TAP 2.80%#, new 40y T+210#.
  LAUNCHED: $790m 2031s tap at 2.80%, $1.3bn new 40y at T+210.

PRICED:
$790m tap of 3.125% 4/15/31 at 102.812 2.80%. T+166.4. Total outstanding now $1.79bn.
$1.3bn 3.875% 2/15/61 97.707 3.990% T+210.

As for r/v, the COLOM 3.125s of 04/15/31 were quoted $104.120 (2.653%; T+152; G151). At the 2.80% pricing level, THE 2031 TAP CONCESSION IS 14.7BP.

The COLOM 4.125s of 05/15/51 $105.45 (3.817%; T+191bp)

- Caisse d'Amortissement de la Dette Sociale (CADES) Aa2/NR/AA (s/-/n) US$5bn 144A/3c7/Reg S 10y social bond due 1/20/31. BofA/HSBC/JPM/SG joint books. List Euronext-Paris. UOP: finance and/or refinance eligible social deficits as set out in the CADES Social Bond Framework. Pricing Jan 12. Settle 1/20.

• IPTs: MS+26 area.
  GUIDANCE: MS+25 area.
  UPDATE: spread set at MS+23.
  LAUNCHED: $5bn 10y at MS+23.

PRICED: $5bn 1.375% 1/20/31 99.721 MS+23.

- KfW Aaa/AAA/AAA (s/s/s), gtd by Federal Republic of Germany, US$5bn SEC registered 5y global due 1/22/26. BMO/Citi/MS joint books. Pricing Jan 12. Settle 1/20.

• IPTs: MS+5 area.
  FINAL GUIDANCE: MS+3#.
  LAUNCHED: $5bn 5y at MS+3.

PRICED: $5bn 0.625% 1/22/26 99.985 0.628% T+10.475 (MS+3).

- Municipality Finance plc (MuniFin) (KUNTA) exp Aa1/AA+ US$ benchmark 144A/Reg S 5y due 3/20/26. BofA/GSI/JPM/TD joint books. Off Issuer's EMTN Program. Pricing Jan 12. Settle 1/20 (T+5).

IPTs: MS+10 area.

GUIDANCE: MS+9 area.

UPDATE: spread set at MS+8.

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