New issues: Schneider Electric raises €1.5bn

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Schneider Electric of France raised €1.5bn of medium-term debt on Tuesday, which was more than expected after investors flocked to one of the last deals before the summer break.

The electrical equipment maker sold €900m of five-year bonds and €600m of 12-year notes, after initially targeting at least €500m.

Both tranches were priced at the tight end of the indicative price guidance. The 2010 notes were priced to yield 28 basis points above mid-swaps and the 2017 bond was priced to yield 51bp over swaps.

The tight pricing came in response to strong demand from investors, who placed orders worth about €2bn for the five-year deal and €1bn for the 12-year tranche.

“The response in the market was phenomenal for this time of year,” said Pierre Lebel, head of the corporate syndicate desk at SG CIB, which managed the sale with Citigroup, Natexis and RBS.

“The demand for the 12-year tranche shows there is still appetite for yield,” said Mark Dodd of RBS,

The A credit rating and rarity of Schneider in the bond market allowed the company to sell 12-year paper at a yield premium of just 23bp above its five-year deal.

Demand for long-dated paper was less pronounced in the secondary market, where 30-year telecoms bonds and some of the recent perpetual hybrid deals suffered.

Telecom Italia’s 2033 and 2055 notes widened 4bp each and the hybrids by Bayer and Südzucker moved out by 2-3bp, while Scandinavian energy companies Dong
and Vattenfall, the other recent hybrid deals, remained unchanged.

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