US IG WRAP-Busy high-grade day sees close to US$5bn in supply

By Danielle Robinson

NEW YORK, April 8 (IFR) - A total US$4.85bn was raised on Wednesday by mostly Yankee borrowers jumping in to get ahead of an expected increase in US bank issuance in coming weeks.

Societe Generale (Paris: FR0000130809 - news) received US$6.6bn of orders for a subordinated 10-year and Glencore Funding US$8.68bn for its multi-tranche deal as investors resumed their hunt for yield.

"We are so much better off than where we were a week ago," said one debt capital markets origination banker.

"The credit market has reacted positively to the weaker than expected payroll number for March and it feels like desks are structurally short secondary paper," the banker said.

"The bid for primary has also firmed up now that the fatigue from March is behind us."

Demand for Societe Generale's US$1.5bn 4.25% 10-year subordinated Tier 2 capital deal demonstrated the huge bid for high yielding bank bonds that sit low in the capital structure.

The bank was able to increase the size of the deal from its minimum US$1bn objective, price at the tight end of guidance, at T+255bp, and pay only a few basis points of new issue concession.

Glencore (Xetra: A1JAGV - news) priced US$2.25bn of three, five and 10-year notes, at spreads that were 10-20bp tighter than initial price thoughts and offering concessions of about 5bp-10bp.

Shinhan Bank priced a US$600m five-year at 92.5bp from a 110bp whispered level on US$4bn of orders and without offering any concession.

And MassMutual Life Insurance received US$1bn of orders for a US$350m 50-year bond. It priced at 207bp from IPTs of 225bp and paid about 7bp in new issue concession.

It's possible ING will announce a debut Additional Tier 1 security offering in Asia overnight, after wrapping up roadshows for a high 7% trigger deal in the US on Wednesday.

Demand is expected to be very strong, not only because it's ING Groep (Amsterdam: INGA.AS - news) 's inaugural CoCo, but also because of the huge bid for bank capital in the US and especially Tier 1 Yankees.

"There is a huge amount of focus on these kinds of securities at the moment, because they yield so much," said a financial institutions group (FIG) coverage banker.

HSBC and Standard Chartered (HKSE: 2888.HK - news) 's recent deals have both performed exceptionally well. HSBC's 6.375% perp non-call 10-year AT1 is trading around 103.25 to yield 5.95% to the call date and Standard Chartered's 6.5% perpNC5-year at 101.125 to yield 6.23%. (Reporting By Danielle Robinson; editing by Shankar Ramakrishnan)