Investors snap up rare Vier Gas bond

Covivio Hotels SCA

21/09/2018 13:54

LONDON, Sept 21 (IFR) - Vier Gas Transport made a rare appearance in the bond market on
Monday, selling a €500m 10-year at a minimal new-issue premium. 
    Investors snapped up the bonds for their scarcity value, placing around €2.5bn worth of
orders for the deal at launch, according to bookrunners.
    Vier Gas Transport, the holding company of OGE - Germany’s largest gas transmission system
operator - has not sold bonds in the euro market since 2013, although it did refinance a €600m
revolving loan last year.
    "It's a straightforward business with a strong credit rating," one lead on the deal. 
    Vier Gas (A-) also put the work in with investors. Roadshows began on September 12 in
Amsterdam, before moving on to Frankfurt and London. 
    Making a fair value assessment was not straightforward because the company's three
outstanding bonds were issued way back in 2013. These trade tight, and have a high cash price of
113-114, which makes them a bit less liquid than some of recent utilities supply in the market,
the lead said. 
    Instead, the leads looked at comparable utilities including French utility Engie (A2/A-/A),
Dutch electricity and gas operator Stedin Holding and Eurogrid, putting fair value in the 55bp
area. 
    At initial price thoughts of 75bp-80bp over mid-swaps, that would mean investors were
getting a juicy new-issue premium of up to 25bp.
    But strong demand meant leads were able to revise the spread by 18bp from the tight end of
the IPT range, leaving investors with a premium of just 2bp.
    Vier Gas also benefited from a relatively clear run at the market, with only one other
potential borrower - Covivio Hotels - looking to sell bonds on the day. 
    Other German corporate borrowers look set to come to market.
    Amphenol Technologies (Baa1/BBB+) mandated JP Morgan, HSBC and Mizuho to hold investor
meetings in Europe during September 25-27. 
    The fibre optic cable manufacturing company is eyeing a euro-denominated Reg S benchmark
trade, targeting a seven to 10-year fixed-rate maturity.  

 (This story will appear in the September 22 issue of IFR Magazine)
 ((Eleanor.Duncan@thomsonreuters.com; +44 20 7542 5016))
 
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