Deutsche Bank (DB) saw investor orders of over €7.6bn ($9.2bn) for a €3bn ($3.6bn) new bond issuance on Monday, being covered over 2.5x issue size despite a tighter pricing. Deutsche Bank raised €3bn via a dual-tranche offering:
- €1.5bn ($1.8bn) via a 6NC5 bond at a yield of 0.807% or MS+120bp, 25bp inside initial guidance of MS+145bp area
- €1.5bn ($1.8bn) via a 11NC10 bond at a yield of 1.392% or MS+150bp, 25bp inside initial guidance of MS+175bp area
The bonds are rated Baa3/BBB-/BBB. The spread of MS+150bp on its 11NC10s was significantly tighter compared to its 10Y issuance last November at MS+205bp. Bloomberg reports that spreads are still wider than peers like BNP, which sold a similar bond last month that was priced 67bp tighter than DB’s given the latter’s legacy of high costs, low revenues, and the fact that it is only about halfway through a turnaround plan. “There is room for compression versus other large-cap banks… The balance sheet is strong enough that there are no real credit concerns,” said Lloyd Harris, head of fixed income at Premier Miton Investors, which holds some of the bank’s bonds. “It was a fantastic response…We saw a number of new investors we hadn’t seen in a while”, said Jonathan Blake, DB’s global head of issuance and securitization. Given the yield premium of the bank’s bonds, Bloomberg notes that speculation could increase for further gains in their bonds.
DB’s 7.5% USD Perps were flat at 107.6, yielding 5.42%.
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