Titolo: DJ Austria Plans Debut 70-Year Bond as Part of Dual-Tranche Issue
Ora: 25/10/2016 11:49
Testo: By Emese Bartha
Austria plans to take a step far into the future by issuing a 70-year bond on Tuesday, the latest example of how cheap central bank money is prompting issuers to secure cheap borrowing for many decades ahead.
The sovereign is planning to complete a dual-tranche transaction, issuing seven-year, July 2023-dated and 70-year, November 2086-dated debt. The latter transaction will be the longest-dated, publicly issued government bond in the eurozone. Ireland and Belgium have previously issued EUR100 million of 100-year bonds in private placements.
Guidance for the seven-year bond is mid-swaps -27 basis points, said one of the lead managers working on the deal. That implies a yield of around -0.17%.
For the 70-year bond, the guidance is 55-60 basis points above the 1.50% February 2047 bond, which is trading at a yield of 0.99%, according to Tradeweb.
Pre-sale demand for the two bonds is in excess of 4.8 billion euros ($5.22 billion) and EUR5.1 billion, respectively, the lead managers said.
The transaction comes amid a flow of ultra-long government bond issuance, triggered by weak global economic growth and low inflation, as well as massive bond purchases by the European Central Bank. The ever lower interest-rate environment, meanwhile, has intensified investors' hunt for yield, impelling them to take on more risk or reach out further into the future.
ING Bank rates strategists said that in light of hedging for ultra-longs by pension funds and insurers, they forecast an initial size of EUR1.5 billion to EUR2 billion for the 70-year tranche.
Before the issuance, Commerzbank rates strategist Michael Leister calculated eurozone sovereigns had already placed more than EUR15 billion in 50-year paper year-to-date. This includes syndicated 50-year bond launches in France, Belgium, Spain and Italy. Each deal was sized at EUR3 billion, except for Italy's, at EUR5 billion.
Lead managers of Austria's transaction are Barclays, Goldman Sachs International, HSBC, Nomura and Raiffeisen Bank.
Write to Emese Bartha at
emese.bartha@wsj.com
(END) Dow Jones Newswires
25-10-16 0949GMT
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