Commentary & Deal Flow

CFR CREDIT CLOSE; STANLN/CRBG Push June Past Estimate; WK Almost There; Latam On Fire

Another $3bn hit the market today (STANLN $2.5bn; CBRG $500m), pushing the week to $12.900bn, and June to $91.145bn. June is at last above the average $89.077bn estimate. The week only needs $340m to hit the average. Meanwhile, Latam issuance is on fire with 4 deals having priced this week (5 if you include the peso-denom trade from America Movil). This is the largest amount of Latam deals in one week since January.

So far this week, Petrobras Global Finance BV (PETBRA), Republic of Chile (CHILE), The Republic of Paraguay (PARGUY) and Ecopetrol SA (ECOPET) have priced from the Latam Arena for a total of $5.500bn. Adding in Rep of Guatemala ($1bn pxd 6/6/23) , Vale Overseas ($1.5bn pxd 6/7/23) and Inversiones CMPC ($500m pxd 6/20/23) the Latam total for June is $8.500bn. (Totals above would be higher if you include America Movil’s MXN17bn long 7yr priced 6/28)

The last time we saw 4 Latam trades hit the market in one week was late Jan/early Feb (WK ending 02/03/23). During that week, Corporacion Nacional del Cobre de Chile (CDEL), Petroleos Mexicanos (PEMEX), The Dominican Republic (DOMREP), and The Central Bank for Economic Integration (CABEI) all priced between January 30th and 31st.

January is the largest LATAM volume month of 2023 ($17.199bn). June at $8.500bn comes in at #2 according to our records.

[STATS]

Here’s today’s rundown:

[STANDARD CHARTERED]

Standard Chartered PLC “STANLN” (A3/BBB+/A) hit the market today with US$2.5bn 144A/Reg S 3-part sr notes (4nc3 fixed rate reset due 7/6/27, 4nc3 FRN due 7/6/27 and 11nc10 fixed rate reset due 7/6/34). Par Calls: 7/6/26, 7/6/26, 7/6/33. FRR tranches: The interest rate will reset on the Optional Redemption Date to be the sum of the relevant Reference Bond Rate plus the Margin. Regulatory/capital disqualification call. Clean up call: 75%. List LSE. English Law. UOP: gcp. Pricing 6/28. Settle 7/6.

Events of Default: Restrictive Events of Default applicable on issue. See Condition 9(b) in the Programme.

Loss Absorption Disqualification Event: Loss Absorption Disqualification Event Call applies at par.

Redemption at the Option of the Issuer: The Issuer may redeem the Notes in whole on the Optional Redemption Date at par, as further described in the Prospectus.

Clean up Call: The Issuer may redeem the Notes in whole, at any time in respect of the FXD Notes and on any Interest Payment Date in respect of the FRN Notes, at par, if 75 per cent. or more of the Notes have been redeemed, as further described in the Prospectus.

Wavier of set-off: Applicable.

VIA BNP/GS/MS/StanChart (B&D)/TD joint books.

Announced with benchmark size, IPTs overnight were set at 4nc3 215a/Seqv; 11nc10 285a

IPTs were revised in 5bp at the NY open to 4nc3 210a/Seqv; 11nc10 280a

Guidance came in at 4nc3 FRN S+193#; 4nc3 FXD T+185#; 11nc10 FXD T+258#.

Ultimately, a $2.5bn deal priced as follows:

PRICED:
$500m 7/6/27 FRN at SOFR+193, at 100.
$1bn 6.187% 7/6/27 100.00 6.187% T+185.
$1bn 6.296% 7/6/34 100.00 6.296% T+258.

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

- STANLN 6.170% due 01/09/27 (nc 26) T+177bp (G160; $100.07) - $1,000m pxd 01/04/23 +205
- STANLN 6.301% due 01/09/29 (nc 28) T+217bp (G208; $100.46) - $1,5000m pxd 01/04/23 +245
- STANLN 2.678% due 06/29/32 (nc 31) T+237bp (G228; $78.50) - $1,250m pxd JUN 2021

4nc3yr: STANLN 6.17% due 01/09/27 (nc 26) T+177bp (G160; $100.09) + 6bp curve = T+183/ 30-35 back at IPT (If using G spread 166 f/v 49 back at IPT). We’re going with T-spread on this one – f/v T+183. At the T+185bp pricing level, 4NC3 CONCESSION IS 2BP.

11nc10:
- STANLN 2.678% due 06/29/32 (nc 31) T+237bp (G228; $78.550) - +12bp lo # = 249; +a few bp for curve = 253bp. 30-35 back at IPT (if using G spread 244/40-45 back at IPT)
- Or BACR 4nc3/11nc10 in May priced 215/280 (65 curve) now trading 189/267 (78 curve) – the 4nc3 curve this morning was 70bp at IPT. Adding 70bp to 4nc3 183 f/v +253.
F/V T+253bp; At the T+258bp pricing level, 11NC10 CONCESSION IS 5BP.

Comps away:

Barclays PLC (Baa1/BBB+/A)
- BACR 5.829% due 05/09/27 (nc 26) T+193bp (G189; $98.78) - $2,000m pxd 05/02/23 +215
- BACR 6.224% due 05/09/34 (nc 33) T+267bp (G267; $98.60) - $2,000m pxd 05/02/23 +280

HSBC Holdings PLC (A3/A-/A+)
- HSBC 6.254% due 03/09/34 (nc 33) T+229bp (G228; $101.57) - $2,250m pxd 03/02/23 +220

Lloyds Banking Group PLC (A3/BBB+/A)
- LLOYDS 5.871% due 03/06/29 (nc 28) T+204bp (G198; $99.27) - $1,250m pxd 02/27/23 +170
- LLOYDS 4.976% due 08/11/33 (nc 32) T+225bp (G221; $92.89) - $1,250m pxd AUG 2022

Natwest Group PLC (A3/BBB+/A)
- NWG 5.847% due 03/02/27 (nc 26) T+187bp (G176; $99.02) - $1,000m pxd 02/27/23 +135
- NWG 5.808% due 09/13/29 (nc 28) T+214bp (G215; $98.50) - $1,250m pxd 06/08/23 +195
- NWG 6.016% due 03/02/34 (nc 33) T+227bp (G226; $99.94) - $1,000m pxd 02/27/23 +210

Final book size was heard as:

$500m 4nc3 FRN - $1.70bn (3.40x)
$1.0bn 4nc3 FXD - $4.20bn (4.20x)
$1.0bn 11nc10 FXD - $3.80bn (3.80x)

[COREBRIDGE GF]

Corebridge Global Funding “CRBG” (A2/A+ s/s) hit the market today with $500m (upped from US$300m) 144A/Reg S no reg rights 3y sr secured FA-Backed due 7/2/26. FA Provider: American General Life Insurance Company. UOP: Purchase one or more Funding Agreements from American General Life Insurance Company. Marketing: www.netroadshow.com | Passcode: CRBGFABN2023. Pricing 6/28. Settle 7/3 (T+3).

VIA BofA (B&D)/DB joint active books.

Announced with $300m size, we heard initial thoughts as T+165a.

Guidance came in at 145#.

Ultimately an increased $500m deal priced as follows:

PRICED: $500m 5.75% 7/2/26 99.900 5.787% T+145.

As for r/v, outstanding the longest bond in the Corebridge Global Funding complex was quoted as follows:

COREBRIDGE GLOBAL FUNDING (A2/A/A)
- CRBG 0.900% due 09/22/25 T+97 (G110; $89.93) - $500m pxd Sept 2020

That said, this outstanding is very illiquid – even for GICs. Market players viewed today’s deal as a quasi-debut, essentially a reintroduction of the program following the Corebridge Financial Inc (Baa3/BBB-/BBB-) spinoff from AIG/IPO in 2022. CONCESSION ON THIS ONE IS N/A.

Comps away;

MET TOWER GLOBAL FUNDING (Aa3/AA-/AA-)
- MET 5.400% due 06/20/26 T+111 (G111; $99.79) - $450m pxd 06/12/23 +120

PROTECTIVE LIFE GLOBAL (A1/AA-/AA-)
- PL 5.209% due 04/14/26 T+137 (G130; $98.65) - $425m pxd 04/10/23 +145
- PL 5.637% due 07/05/30 T+185 (G185; $100.12) - $500m pxd 06/27/23 +185

PRINCIPAL LFE GLB FND II (A1/A+/A+)
- PFG 1.500% due 11/17/26 T+136 (G144; $87.16) - $600m pxd Nov 2021
- PFG 5.500% due 06/28/28 T+152 (G153; $99.87) - $300m pxd 06/21/23 +155

EQUITABLE FINANCIAL LIFE (A1/A+/A+)
- EQH 1.700% due 11/12/26 T+142 (G150; $87.65) - $500m pxd Nov 2021

Final book size was heard as $1.250bn (2.50x)

[REPUBLIC OF PARAGUAY]

Republic of Paraguay “PARGUY” (Ba1/BB/BB+ p/s/s) hit the market today with US$500m 144a/Reg S 10y Sr Notes due 8/21/2033. 9.7yr WAL. Amortization: Two payments in 2032 (40% of amount outstanding) and 2033 (remaining amount outstanding). MWC; 3-mos par call. List: Lux Stock Exchange/Euro MTF Market. Governing Law: State of New York. UOP: Pay for the purchase price for the Tendered Bonds that are validly tendered and accepted in the Offer to Purchase and for general government purposes. Marketing: Deal Roadshow Link: https://dealroadshow.com/e/PARA2023Password: PARA2023. Pricing 6/28. Settle 7/12 (T+9).

Via Citi (B&D)/Itau BBA joint books.

Announced with $500m size, we heard initial thoughts as T+165a.

The deal launched $500m at 5.85%.

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

PARGUY 3.849% due 06/28/33 $87.13 (5.700%; T+199; G195) - $500.6m priced Jan 2022

Adding in 13bp for lo $ (1bp per $) puts f/v at 5.830%. At the 5.850% pricing level, CONCESSION IS 2BP. (Some also thought f/v was 5.85% / flat)

The peak book on today’s Paraguay trade was a whopping $3bn, with the final coming in at $2.2bn (4.4x)

[ECOPETROL]

Ecopetrol SA “ECOPET” (Baa3/BB+/BB+) hit the market today with US$ benchmark SEC registered 2-part sr notes (new long 5y due 1/19/29 and tap of 8.875% 1/13/33 - $2bn outstanding). MWC (T+50 on tap) then 1mo par call on L5y and 3mos on 2033 tap (starting 10/13/32). 101 CoC. List NYSE. New York Law. UOP: (i) Finance Ecopetrol’s 2021-2023 investment plan; and/or (ii) Finance expenditures outside of their 2021-2023 investment plan. Pricing 6/28. Settle 7/6 (T+5).

VIA JPM/Scotia/SMBC (B&D) joint active books.

Announced with benchmark size, we heard initial thoughts as L5yr 8.800%; 2033 tap 9.250%.

Guidance came in at L5yr 8.625%#; 2033 tap 9.05%a (+/-5)

Ultimately, a $?? Deal priced as follows:

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

ECOPET 6.875% due 04/29/30 $91.60 (8.52%; T+480; G466) - $2bn pxd April 2020
ECOPET 4.625% due 11/02/31 $77.25 (8.48%; T+476; G470) - $1.25bn pxd Oct 2021
ECOPET 8.875% due 01/13/33 $99.48 (8.96%; T+525; G523) - $2bn pxd 01/10/23

‘33s tap: Oustanding quoted 8.96%; Tap priced 9.00%. ’33 TAP CONCESSION IS 4BP. (Although some had this quoted at 8.91% and said 9bp NIC).

L5YR: 2030 8.52%; 2031 8.48%; Par values assuming 1bp per $ show 2030 at 8.60% and 2031s at 8.70%. That’s a 10bp differential for 18 months – around 0.6bp per month. From today’s Jan ’29 maturity to the 4/29/30 outstanding at 8.60% is 15 months (x 0.6 = 9bp). This puts f/v on today’s long 5yr at 8.51%. At the 8.625% landing level, L5YR CONCESSION IS 11.50BP.

(That said, some used the Colombia curve below. Today’s ’33 tap landed 130 back of the COLOM ‘33s; Adding 130bp to the COLOM ‘29s (7.11%) would suggest L5yr f/v (1/19/29) at 8.41% and a 21.5bp NIC).

Colombia was quoted as follows:

COLOM 3.875% due 04/25/27 $91.05 (6.56%; T+259; G238) - $1.896bn outstanding
COLOM 4.500% due 03/15/29 $87.90 (7.11%; T+315; G319) - $2.000bn pxd Oct 2018
COLOM 8.000% due 04/20/33 $102.05 (7.69%; T+398; G397) - $1.624241bn outstanding

Final book size was heard as:

$1.2bn L 5yr - $2.5bn (2.08x)
$500m ’33 tap - $800m (1.60x)