New Issues: Demand strong for Air France paper

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Air France-KLM, the world’s largest airline measured by turnover, illustrated the strength of investor demand for new bonds on Monday when the unrated issuer saw its €550m eight-year issue attract demand for more than three times the paper on offer.

The company, which took over Dutch flag carrier KLM in May 2004, priced the fixed-rate January 2014 bond at 92 basis points over mid-swaps, down from initial guidance of 95bp over.

The bonds, which carry a coupon of 4.75 per cent, saw €1.8bn worth of demand.

Frederick Zorzi, co-head of European syndicates at BNP Paribas, one of the lead managers, said: “It’s unusual to get such strong demand for a non-rated company in a sector that has had its difficulties.”

The other lead managers for the sale were Barclays Capital, HSBC and SG CIB. Air France-KLM is not rated by any of the three major ratings agencies.

American International Group, the world’s largest insurer, is hoping to benefit from the strong investor demand seen for other financial institutions last week with a 5-year, fixed-rate benchmark euro bond.

The group is hoping to lock in low interest rates, and the senior bond is expected to price this week at about 15bp over mid-swaps.

ABN Amro, RBS and UBS are managing the sale. AIG is rated Aa2 by Moody’s and AA by S&P.

The European Investment Bank, the financing arm of the European Union, and UniCredit, Italy’s biggest bank, both saw strong demand for their bonds last week.

Elsewhere, Syngenta AG, the Swiss-based agrochemicals group, issued price guidance on its €500m bond at 25bp to 27bp over mid-swaps, one of the lead managers said.

UBS and Deutsche Bank are lead managers for the bond issue, which will have an intermediate maturity.

The company will use the proceeds to refinance a bond that was repaid at maturity in July and for general corporate purposes.

Syngenta is rated A3 by Moody’s and A- by S&P.

CIT Group, one of the largest US commercial lenders and consumer finance companies, plans to sell a 10-year euro bond.

The benchmark-sized bond, which means about €500m for CIT, is expected to be priced this week, with guidance in the region of 60bp over mid-swaps.

ABN Amro, BNP Paribas and UBS are managing the deal.

CIT is rated A2 by Moody’s and AA by S&P.

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