US IG WRAP-US high-grade tallies record month

By Danielle Robinson

NEW YORK, March 26 (IFR) - Standard Chartered (HKSE: 2888.HK - news) 's US$2bn debut Yankee Coco and a US$1.75bn covered bond from Toronto-Dominion Bank pushed March into record territory Thursday, making it the biggest issuance month ever.

With US$146.51bn priced so far - and three business days still to go - the investment-grade market keeps humming along, this week driven largely by FIG borrowers.

Of the US$23.15bn issued so far this week, only US$900m has come from outside the financial institutions group.

Opportunistic financials have taken advantage of investors needing a break from pure corporate issuance, though many have had to leave some spread on the table to get deals done.

Standard Chartered was no exception today, attracting a whopping US$22bn order book after marketing its perpetual non-call five-year CoCo at chunky IPTs in the high sixes.

StanChart (HKSE: 2888-OL.HK - news) 's name recognition in Asia meant that about US$15bn of its orders came from that region.

But the absence of AT1 issuance in the Yankee market this year - this was only the second such deal this year - brought in very strong sponsorship from US domestic investors.

About 550 investors ended up putting in orders, and allocations were ultimely split three ways between Asia, Europe and the US.

The transaction was trading around 101 in the aftermarket, having priced at par.

Standard Chartered was able to pull guidance in to 6.75% and then price the trade at 6.5% - versus a 6.375% coupon on HSBC's US$2.25bn perpetual non-call 10-year CoCo priced on Monday.

The yield looked chunky when it was guided in Europe's day at 6.75%, especially against HSBC's deal which was trading at the time at a dollar price of 102 on the bid side.

At the end of the day, however, paying just 12.5bp more than the higher-rated HSBC AT1 (Baa3/NR/BBB) seemed reasonable for the lower rated Standard Chartered deal, at Ba1/BB/BBB and considering the noise around the bank of late.

The bank reported a 25% slide in annual pre-tax profits this month and has been under pressure to raise equity to address deteriorating asset quality on its balance sheet.

TD Bank meanwhile paid a few basis points in new issue premium for its US$1.75bn five-year covered, launched at mid-swaps plus 37bp from IPTs of MS+40bp area.

TD's outstanding 2.25% September 2019 covereds were trading at a Z spread of 32.6bp pre-announcement, while Royal Bank of Canada's SEC-registered 1.875% February 2020s were at Z+34.2bp.

Some bankers thought TD's 144A format would require a few basis points in premium over its competitor. (Reporting by Danielle Robinson; Editing by Natalie Harrison)