PREVIEW: Nationwide re-enters Yankee market

By Danielle Robinson

NEW YORK, Jan 12 (IFR) - Nationwide Building Society (LSE: CCDS.L - news) is expected to price its first dollar-denominated bond in five years on Monday, a five-year senior unsecured bond that has attracted US$2.6bn in demand.

Bookrunners Barclays, Citigroup (NYSE: C - news) , Credit Suisse (NYSE: CS - news) and UBS (NYSEArca: FBGX - news) went subject mid-morning on a US$1bn offering at 98bp over Treasuries, the tight end of guidance, after the lender spent months buttering up investors.

Guidance was pulled in to 100bp over Treasuries, plus or minus 2bp, from initial price thoughts in the low 100bps. At 98bp it will offer a new issue concession of around 8bp, according to some market participants, which would be in line with recent deals.

"I think 90bp is fair value if you consider that they should trade wide of Lloyds and Abbey National," said one banker away from the deal.

All issuers are having to offer decent concessions given recent volatility, while Nationwide will also pay up a bit more because it is a building society.

"Building societies are not something that the US market understands well because we don't have them here," said one syndicate manager not involved in the transaction.

The deal is the single-A rated UK lender's first Yankee trade since February 2010, when it issued US$700m of 4.65% February 2015s, and US$800m of 6.25% February 2020s.

The 2020s are trading at a cash price of US$118 for 100bp over Treasuries or G+98bp. Deducting 8bp to adjust for the high dollar price, suggests fair value for a new five-year at around 90bp.

Other comparables include Lloyds TSB Bank's 2.35% September 2019s at T+70bp, or G+78bp, and Abbey National Treasury Services' 2.35% September 2019s, which trade at T+71bp, or G+79bp.

Barclays (LSE: BARC.L - news) is another comparable, with outstanding 2.5% February 2019s at T+54bp or G+75bp.

The announcement of the deal has been long-awaited.

Nationwide first roadshowed the trade in September and is believed to view the transaction as a strategic re-entry into the Yankee market.

After roadshowing in September it decided to wait for better pricing, and to develop a wide breadth of investor interest by continuing to visit accounts.

The deal is one of eight investment-grade trades expected to price on Monday, dominated by financial names including ANZ from Australia and insurance company AIG. (Reporting By Danielle Robinson)