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Martin Egan, Global Head of Primary Markets & Origination, comments on the current market situation.
"September proved to be one of the most challenging months of 2011, as markets searched for guidance on European sovereign woes, the strength of the global economy and the effect of impending regulation. Investment grade corporate risk remains popular with 'safe haven status' providing opportunity. Financial issuer access remains centred around covered bonds, with some limited signs of life in senior unsecured space. Higher yielding sectors have suffered due to macro volatility with risk-off mentality dominant. Thankfully, many issuers are well-funded for the year, but those that are not will face a fragile but navigable market.
From BNP Paribas' perspective, it is very pleasing to see a resurgence of the Sterling corporate market, with a bookrunning role on four out of five public issues during the month, while the European High Yield space continues to grow in confidence with Heidelberg Cement's €300mm 7-year deal. Meanwhile, the US Dollar market remains open, if in fits and starts, for the right borrower: Daimler and Rio Tinto are two corporate entities we have brought to the Yankee market in September.
Markets will remain jittery until a solution to the the eurozone's troubles is found, but windows of opportunity in the primary markets will still be there - with the right timing and execution critical to success."
Below are highlights of some interesting deals - across currencies and issuer-type - that BNP Paribas closed in September 2011:
28 Sept - Heidelberg Cement €300m 9.5% HY due 2018
28 Sept - Southern Gas Networks £300m 4.875% due 2023 - Issuer's first GBP issue since October 2009
28 Sept - Areva €500m 4.625% due 2017 - First issue in two years
27 Sept - GDF Suez CHF300m 1.5% due 2017
27 Sept - Eastern Power Networks (UKPN) £250m 4.75% due 2021
27 Sept - Peugeot SA €500m 6.875% due 2016 - First Euro bond issue by crossover corporate issuer since end of the summer
27 Sept - Agence Francaise de Developpement (AFD) €600m 3.125% due 2024
26 Sept - LG&E and KU Energy LLC $250m 4.375% due 2021
23 Sept - Fannie Mae $3bn 0.625% Benchmark due 2014 - BNP Paribas' 2nd Lead managed transaction for Fannie Mae and 4th for a GSE in 2011
21 Sept - Imperial Tobacco £500m 5.5% due 2026 - Issuer's first sterling bond since 2009
15 sept - Federal Home Loan Mortgage Corp $5bn 0.375% due 2013 - BNP Paribas' first benchmark USD lead transaction for Freddie Mac - Our 3rd US agency bookrunner deal of 2011
15 Sept - TeliaSonera €500m 4% due 2022
14 Sept - EU €5bn 2.75% due Sep 2021 - BNP Paribas has been mandated lead manager on 4 out of 7 EU public benchmark issues in 2011
14 Sept - Rio Tinto Finance (USA) Ltd. $2bn 3-tranche
14 Sept - Suez Environnement €250m increase of €500m 4.078% due 2021
8 Sept - Toyota Motor Credit Corp $2.5bn dual tranche due 2016/2021 - First public issue since tsunami: BNP Paribas' first USD mandate for TMCC
7 Sept - Scottish & Southern Energy £300m 4.250% due 2021 - Re-opens European corporate market: first GBP since early July
7 Sept - Daimler $3.25bn four tranche Yankee
7 Sept - Heinz $700m dual tranche due 2016/2021 - BNP Paribas' debut active bookrunner role for issuer
7 Sept - Wisconsin Electric Power Company $300m 2.950% due 2021 - BNP Paribas' debut active bookrunner role
Sept - Santander UK €1bn Covered Bond due Sep 2016
1 Sept - BPCE SFH €1.25bn 10y 3.75% Covered Bond due 2021
More information about Fixed Income's activities on BNP Paribas Global Markets website.
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Laurent Quignon, Head of banking economics at BNP Paribas is answering to our questions.