Deutsche Post decision hits deals pipeline
The new issues pipeline was hit by news that Deutsche Post, the German mail operator, decided to postpone the roadshow for its debut benchmark bond deal worth ý1bn which it intended to place on the market in the coming weeks.
The roadshow was postponed after the European Commission on Wednesday confirmed it would have to pay back ý572m to the State of Berlin after it used the state aid to subsidise some of its lossmaking businesses.
Bankers now expect the deal, which carries an Aa3 rating by Moody’s Investors Service, to happen either in July or September.
The delay comes after the Italian and French mail operators Poste Italiane and La Poste issued debt close to ý1bn earlier in the week.
Yesterday, the primary markets were dominated by a ý500m bond issued by Dow Chemical, the second-largest chemical company in the US.
It was the third euro-denominated bond issued by Dow Chemical, which has been seeking to diversify its investor base by turning to the European markets.
The five-year notes were priced to yield 85 basis points above swaps, which was at the wide end of the price talk. Robert Whiccello, on the syndicate desk at BNP Paribas, one of the bond’s joint bookrunners, said: “Market conditions are very difficult, so the fact we were able to get the deal done within the range shows the strength of the name.”
Dow Chemical debt is rated single A by Standard and Poor’s and one notch lower by Moody’s, at A3. The company is expected to use the proceeds of the bond for general corporate purposes.
In terms of upcoming deals, Knorr-Bremse, a Munich-based company which is the world’s leading maker of rail and truck brakes, is expected to tap the international capital markets for the first time by issuing bonds worth ý150m-ý200m. The price in the offering – for which Deutsche Bank and Dresdner Kleinwort Wasserstein are the lead banks – is expected to be set next week.
The family-owned company has become the latest in a series of private Mittelstand (mid-sized) German groups to use the bond markets to finance growth. Others in recent years to use this financing method include JM Voith, a maker of paper production equipment, and Claas, Europe’s biggest manufacturer of combine harvesters.
