MuniFin (Municipality Finance Plc) issued a USD 1 billion benchmark on Tuesday September 16th. The orderbook grew to 1.5 billion US dollars despite the pricing was tightened during the process on the back of strong demand.
The 3-year fixed rate benchmark was eventually very tightly priced, ending at –2 basis points versus mid-swaps. The benchmark pays a coupon of 1.125 percent with a reoffer yield of 1.235 percent.
The key to the success of the issue was excellent timing. MuniFin estimated there was enough demand since there were not too many competing benchmark issues on the market at the same time. The transaction took advantage of the short issuance window before the FOMC meeting on Wednesday September 17th.
”The situation on the benchmark markets has been very good almost throughout the year. There is an enormous amount of liquidity in the market; demand is clearly greater than supply as many borrowers have smaller funding needs than previously anticipated. This has led to a very strong capital market with tightening secondary market levels. MuniFin’s most recent benchmark transaction benefited from this”, says Joakim Holmström, Vice President and Head of Funding at MuniFin.
“An impressive outcome”
There is a lack of supply especially of the kind of low-risk investment targets that MuniFin represents. Investor demand in the benchmark was spread evenly between EMEA and the Americas – 45 and 41 percent respectively – with 14 percent of the demand originating from Asia.
“A fabulous result for the borrower reflecting great timing and pricing with the statistics being testimony of the incredibly strong sponsorship: 78% going to Central Banks and Official Institutions. Pricing at MS-2 reflects the tightest ever pricing for MuniFin as well. An impressive outcome,” said Keith Price, Head of SSA Syndicate at J.P. Morgan.
”MuniFin’s success in funding is based on long-term cooperation and continuing activity in several markets. The Finnish municipalities are also attractive investment targets internationally”, says Esa Kallio, Executive Vice President of MuniFin.
The transaction was MuniFin’s second USD benchmark this year. The previous benchmark in May was also rapidly oversubscribed.
Esa Kallio, Executive Vice President, MuniFin, tel. +358 50 3377 953
Joakim Holmström, Vice President and Head of Funding, MuniFin, tel. +358 50 444 3638