26/11/2014 13:03:06 Free Membership Login

Banco Popolare, UniCredit Austria Snubbed as Bond Sales Dropped

Date : 10/09/2012 @ 5:19PM
Source : Dow Jones News
Stock : Banco Popolare (BP)
Quote : 10.77  0.0 (0.00%) @ 10:31AM
Banco Popolare share price Chart

Banco Popolare, UniCredit Austria Snubbed as Bond Sales Dropped

Banco Popolare (BIT:BP)
Historical Stock Chart

3 Years : From Nov 2011 to Nov 2014

Click Here for more Banco Popolare Charts.

By Ben Edwards

Italian lender Banco Popolare SC (BP.MI) and UniCredit Bank Austria shelved plans to sell bonds late Monday after failing to attract sufficient demand amid a weaker backdrop for riskier debt.

Banco Popolare was seeking to sell a 500 million euro ($649.1 million), 3.5-year bond--its first senior unsecured debt sale since March 2011. The bank, which is rated one notch above junk by Moody's and Standard & Poor's, was offering to pay investors around 390 basis points over the reference midswap rate, 60 basis points less than similarly rated peer Banca Monte dei Paschi di Siena (BMPS.MI) sold two-year paper for only last month.

In contrast, Italian flagship bank Intesa Sanpaolo SpA (ISP.MI) Monday offered investors 315 basis points over midswaps for a seven-year deal, attracting almost EUR5 billion of demand.

"The market has opened up for more Italian and Spanish banks, but there remains a clear preference for the top-tier names in these countries," said Michael Symonds, a credit analyst at Daiwa Capital Markets.

Given that Banco Popolare sits on the cusp of investment grade, the lack of demand was more of an issue with the name and the challenges the bank faces as a second-tier Italian bank as opposed to the cost of the bond, Mr. Symonds added.

UniCredit Bank Austria, a subsidiary of Italian lender UniCredit, was seeking to sell its debut senior unsecured bond Monday, offering investors about 150 basis points over midswaps for a five-year deal.

That is 240 basis points less than UniCredit Italy paid for three-year money last month, although that price disparity is partly because the Austrian division is rated two notches above the Italian parent at A3 and A by Moody's and S&P, respectively.

But even a superior credit rating may not have been enough to reassure some investors given the link to its Italian parent and the ongoing uncertainty for issuers domiciled in the euro-zone's fiscally frail regions.

"[The bank] remains an operating entity of UniCredit Group, and as such is not totally immune to developments in southern Europe, so investors may have felt that at 150 basis points over swaps, they weren't being adequately compensated for that risk," said Brian Barry, fixed-income analyst at Investec.

Monday's weaker market backdrop may also have been a factor in deterring investors, analysts say, with the cost of insuring European bank debt against default rising.

The iTraxx Europe Senior Financials index, which comprises 25 high-grade banks and insurers, ended the day five basis points wider at 183 basis points, according to data provider Markit.

"We are still some way from a return to normal market conditions so it's not altogether surprising to see some deals run into trouble, particularly against the backdrop of a weaker day for risk assets," Mr. Barry said.

Write to Ben Edwards at ben.edwards@dowjones.com



Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.

NYSE and AMEX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

1 site:2 in 141126 13:03