New issues: Stora Enso in SKr4.3bn deal

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Stora Enso, the Nordic pulp and paper producer, on Thursday issued its first Swedish kronor-denominated bond in more than four years, selling SKr4.3bn of paper with a five-year maturity.

The company said it had taken advantage of the favourable market conditions to issue the bond and that the proceeds would go toward restructuring the company's debt portfolio.

The 3.875 per cent December 2009 bond was priced to yield 38 basis points more than the mid-swap rate. The bonds are rated Baa1 by Moody's Investors Service, three levels above speculative grade, and the equivalent Triple B plus by Standard & Poor's.

Handelsbanken, SEB Merchant Banking and Nordea Markets managed the sale.

The company last appeared in the market in June this year when it exchanged about €475m of its €850m 2007 issue into a new 10-year bond. The new issue is Stora's largest outstanding Swedish kronor-denominated bond and the first since a SKr4bn issue in November 2000.

Bupa, the UK health insurance group, completed the sale of £330m of perpetual bonds that can be bought back in January 2020.

The bonds, which will count as Upper Tier 2 regulatory capital, were priced to yield 160bp above the comparable gilt, inside the initial 170bp guidance, after the order book approached £2bn.

"Bupa is a rare name to the debt markets and there was strong appeal from sterling institutional investors," said Dominic Franklin of ABN Amro's financial institutions origination team.

Bupa also received in excess of £88m of its bonds issued in 1993 in exchange for the new deal and is expected to launch a tender offer for the remainder of the old issue soon.

"This deal provides us with room for growth going forward," said Julian Davies, director of corporate finance at Bupa. "We could have gone for a mixture of Tier 1 and Upper and Lower Tier 2 paper, but decided that we wanted one liquid issue."

He added that issuing UT2 capital left the company with the opportunity to issue LT2 and T1 bonds at a later stage.

"Bupa was very well received during the extended roadshow. The book was heavily oversubscribed which allowed the deal to price at a tight level," said Jean-Marc Mercier at HSBC, which managed the sale with ABN Amro.

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