Air Liquide bonds outperform in softer market

By Hillary Flynn

NEW YORK, Sept 23 (IFR) - Spreads on Air Liquide Finance's bonds that were part of the French gas company's dollar bond debut were tighter on Friday, a day after pricing, despite a weaker market tone.

Air Liquide (LSE: 0NWF.L - news) 's 30-year bonds were being quoted at Treasuries plus 105bp, or 13bp inside their pricing levels, while the 10-year was 8bp tighter.

The company's three, five and seven-year bonds were also up to 10bp inside pricing levels.

Investors said the US$4.5bn deal did well partly because the single-A name came with new issue concessions in a market that typically sees borrowers of this quality come extremely tight to the curve.

Air Liquide, rated A3/A-, got a US$20.4bn book for its trade which enabled it to price five tranches some 20-32bp inside initial price thoughts.

Even (Taiwan OTC: 6436.TWO - news) then, final pricing offered investors 2bp-5bp in new issue concessions compared to its nearest comps.

"It's a new name in the US dollar market and it came cheap to Praxair (NYSE: PX - news) 's outstanding bonds," said one investor who participated in the Air Liquide deal.

A second investor who bought the bonds said the 2bp-5bp concession was decent for an A-rated M&A financing deal.

Proceeds will partly be used to take out a bridge for Air Liquide's acquisition of AirGas (NYSE: ARG - news) that closed in May.

"The bonds have appeal if you look at where other M&A financings like Shire (Xetra: S7E.DE - news) 's debut came," he said.

Drugmaker Shire (rated Baa3/BBB-) issued a larger US$12.1bn deal on Monday to take out a bridge taken to finance its US$32bn acquisition of Baxalta (Berlin: 9BX.BE - news) on Monday. It priced four bond tranches with no concessions versus its nearest comps. (Reporting by Hillary Flynn; editing by Shankar Ramakrishnan and Paul Kilby)