MuniFin took advantage of the earliest available window following the US holiday on Monday 2nd September to announce the mandate of their second USD benchmark transaction of 2019. This 3yr benchmark follows MuniFin’s successful 5yr transaction in March and is their largest USD benchmark issue since 2013. Following the volatile summer period, MuniFin were able to deftly identify an open issuance window amidst a highly anticipated SSA pipeline. Despite the recent market volatility, the ability of MuniFin to move 3 basis points from IPTs is an achievement no other SSA peers have managed since January.

The transaction was announced to the market at 11.15am London time on Tuesday 3rd September 2019, with investors invited to reflect Indications of Interest (IOIs) for a USD benchmark transaction. Initial Price Thoughts – IPTs – of MS+18bps area were released in tandem, representing a marginal new issue concession to fair value.

The investor response throughout the European afternoon and overnight US sessions was noteworthy, with IOIs exceeding USD 1.9bn by the London open on Wednesday 4th September. Due to the quality of the order book, price guidance was revised by 1bp to MS+17bps area. Momentum and investor interest continued to build throughout the London morning, and less than one hour later, investor orders had reached in excess of USD 2.9bn. A deal size of USD 1.25bn was communicated to the market at this time and guidance revised further to MS+16bps area. Investor demand continued to grow, and by the time global books were closed the order book had peaked in excess of USD 3.25bn. This allowed MuniFin to set the spread at MS+15bps, 3bps tighter than IPT.

The bond priced with a final spread to the 3yr US Treasury of 10.05bps which represents the tightest UST spread for a MuniFin USD bond ever, as well as the tightest spread for an agency name in the SSA space post-summer.

Despite this, the demand from the Official Institution and Central Bank community was significant at 67%. In terms of geographical distribution, the bond was evenly distributed across EMEA, Americas and Asian-based investors alike.

MuniFin has funding requirements of EUR7.1bn for 2019 and after this transaction have completed EUR 5.5bn of their funding for the year.

Comments on the transaction:

“Huge congratulations to the Munifin team for a remarkable transaction! Despite market volatility, Munifin was nimble out of the summer period coming to market with its latest 3-year USD benchmark, delivering a huge success to boot. This is a fitting way to celebrate Munifin’s 30th anniversary this year with such a fantastic result.”
Lee Cumbes, Head of Public Sector EMEA, Barclays

“MuniFin have executed another excellent USD transaction, their largest since 2013 despite the backdrop of an extremely busy supply window in the SSA space. This transaction was further proof of the support MuniFin receive from the Official Institution community globally which allowed them to be one of few issuers who has moved 3bp from IPTs in 2019.”
Robert Matthews, SSA DCM, BNP Paribas

“A brilliant result for MuniFin. An oversubscribed, high quality orderbook with over 60% from Central Banks / Official institution allowed a 3bps spread tightening through book-build – the first time for an SSA since January. This is a testament to the MuniFin name and ability to take advantage of market conditions.”
Matthieu Batard, Head of SSA Syndicate, J.P. Morgan

“Arguably MuniFin’s most successful transaction ever with their largest orderbook, tightest spread to US Treasuries and a 3 basis point move from IPTs in this volatile backdrop. This is an incredible achievement for the MuniFin team and we congratulate them on the flawless execution of their transaction.”
Ally Goddard, SSA DCM, TD Securities

Further information:

Joakim Holmström, Executive Vice President, Capital Markets,
tel. +358 9 6803 5674
Antti Kontio, Vice President, Head of Funding, Capital Markets,
tel. +358 9 6803 5634 

Books opened on Wednesday morning at 8.00am GMT with guidance of MS +15 bps area after first collecting indications of interest at +16 bps area overnight.  The books were closed shortly at 9.00am GMT, the strong demand allowing MuniFin to fix the spread at MS +14 basis points. Final orders were in excess of USD 3 billion. This represents the largest-ever orderbook for a MuniFin USD benchmark.

– We are delighted with the outcome of the trade. The USD is one of MuniFin’s strategic benchmark markets and we’re pleased to have seen such a strong reception for this trade from our long-standing investor base. This was one of the fastest book-building processes for a USD transaction that I can remember and the USD 3bn+ of orders represent the largest-ever orderbook for a MuniFin USD deal, says Joakim Holmström, the Head of Capital Markets at MuniFin.

More than 45 investors participated in this transaction with particularly strong demand from central banks, official institutions and bank treasuries. Geographically, half of the demand originated from the EMEA region.

Keys to success: strong name recognition and swift reaction to a favourable market backdrop

The lead managers of the transaction were Bank of America Merrill Lynch, BMO, Nomura and Scotiabank.

– This is an outstanding result for MuniFin’s first USD benchmark of the year. A three times oversubscribed book and pricing through their curve is testament to MuniFin’s strong name recognition in the USD market, comments Managing Director Massimo Antonelli of BMO Capital Markets.

– Municipality Finance delivered a textbook USD benchmark transaction by moving swiftly in reaction to a favourable market backdrop. The outsized orderbook reflected a broad appeal of the name to a wide variety of investors; this in turn allowed Municipality Finance to price extremely tight versus its curve and its peers, says Cesare Roselli, Managing Director of Scotiabank.

MuniFin has been a frequent issuer in the Japanese Uridashi market since the ’90s. Uridashi bonds are issued in a variety of structures and MuniFin is active in all major product groups, equity linked and FX linked structures being the most important. Uridashi market plays an important role in MuniFin’s funding strategy as it provides good geographical and maturity diversification. 

More information:

Award winners on the CMD Portal > 

Joakim Holmström, Head of Capital Markets
Antti Kontio, Head of Funding and Corporate Responsibility

MuniFin announced the mandate for a new March 2024 EUR benchmark in the London afternoon on Tuesday 8th January. With constructive market backdrop into Wednesday 9th January books opened officially in the London morning with the price guidance of MS-5 area.

Positive response from the international investor community contributed to a steady order book growth from high quality accounts and with books approaching the EUR1bn mark at 11:00 UKT, the final spread was confirmed at MS-5 bps to offer market participants definition.

Interest continued to grow and books closed in excess of EUR 1.25bn. The deal was priced with a reoffer price of 99.653%, an annual yield of 0.193% and pays a coupon of 0.125% annually.

The high quality orderbook was comprised of Bank treasuries (37%), Central Banks and Official institutions (36%), Fund managers (20%) as well as Corporates (7%). The majority of orders came from the EMEA region (79%) followed by good participation out of the Nordic region (18%) and the US (3%).

– A strong result for MuniFin, combining attractive pricing with high quality oversubscribed orderbook. MuniFin showed true leadership in deciding to be the first Nordic SSA to come to the EUR market so early in the year despite the volatile market opening and crowded market space. A true testament to MuniFin’s credit story and track record, says Kamal Grossard-Amin, Managing Director, Head of SSA DCM at Nordea, who acted as a joint lead manager in the transaction.

More information:

Antti Kontio, Head of Funding
antti.kontio(at)munifin.fi
+358 50 3700 285

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Focus on both EUR and USD benchmark markets will continue. The funding plan has been divided into two categories: strategic and tactical. The plan is to issue roughly 2/3 of the funding through strategic trades and the rest 1/3 through structured retail notes and private placements. This is also in line with 2018 allocation. 

MuniFin is also planning to issue a new benchmark sized Green bond, most probably in EUR or USD. Timing for this transaction will depend on the underlying asset portfolio but the aim is to issue in H1.

2018 has been successful in terms of new funding: EUR 7.2 billion has been issued year-to-date and the full-year estimate is EUR 7.5 billion. Out of this almost 70% has been issued in strategic public markets. MuniFin has issued two USD fixed rate benchmarks (3 and 5y), one USD FRN and one EUR benchmark in 15y. In addition, existing EUR benchmarks have been tapped few times in 2018. 

Top 5 currencies in 2018 have been USD (43%), EUR (25%), JPY (19%), GBP (8%) and NOK (3%).