Current developmentsThe first quarter saw $15.6 billion equivalent of issuance, which easily outstripped the $10.4 billion and $8.1 billion in Q1 2011 and Q1 2010, respectively. This record pace mainly reflects the exceptional January performance. March was also up on the previous two years, albeit more modestly, at +8% and +12%, respectively.
17 issuers came to the market in March, raising $5.6 billion between them. The $1.6 billion of US issuance was dominated by a $1 billion deal for JRD. Again, non-US issuers dominated, with 71% of cross-border issuance. Significant deals were Bellon, a $215 million 10/7 amortising deal at a spread of about T+380bps, which was very wide even for a NAIC-2 and intimated at the HoldCo/OpCo structure. (Bellon is a family vehicle which holds the controlling stake in Sodexo, the French catering group. Sodexo, also a NAIC-2, is a favoured name in the private placement market. It last came in February 2011 when it took $600 million at a very tight T+120bps for 10 years.)
Philips Electronics undertook a secured CTL transaction which priced at 60bps wide of the public deal for the corporate that closed at around the same time. This $432 million transaction gives an indication of the market's dislike for structured deals, even for highly-rated issuers. UK REIT Great Portland Estates raised a further $200 million, having debuted in April 2011 with a $250 million deal. No UK accounts took part in this deal because pricing at T+255 bps for 10 years offered no premium over sterling-denominated publics. The US market continues to trade tighter than European markets, even on a swapped basis.
There are only a handful of deals in the market at the moment, but that could well change after Easter.
Visit our pooled funds website to find out more about our range of fixed income pooled funds.
