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JPMorgan Chase touting senior and sub issue |
JPMorgan Chase has taken soundings with investors with regard to issuing its first Kangaroo deal, discussing the possibility of bringing either or both senior and subordinated deals.
The US bank held conference calls in the week ending June 8 and is not planning to roadshow before issuing.
Investors say JPMorgan Chase mooted a five-year senior product issued by the bank’s 100 per cent risk-weighted holding company (JPMorgan Chase & Co AA-/Aa2) with indicative price talk at around 20 basis points above swap.
The firm is also understood to have discussed a 10-year bullet subordinated bond offered on a reverse enquiry basis by the 20 per cent risk weighted bank entity (JPMorgan Chase NA AA-Aa1). However, with JPMorgan Chase believed to be at the stage of gauging interest in a subordinated deal, pricing talk on this deal is less clear.
The senior debt indicative price is slightly inside the senior deal brought on May 18 by Wachovia Corporation (AA-/Aa3). The A$1.05 billion (US$860 million) senior tranche priced at 21 basis points over swap. At the same time, Wachovia Bank (AA-/Aa2), priced a A$400 million 10-year bullet subordinated deal at 38 basis points over swap.
This one basis point difference between the JPMorgan Chase and Wachovia senior deals makes sense in light of the rating difference between the two banks. Both JPMorgan Chase & Co and JPMorgan Chase NA are rated one notch higher than Wachovia Corp. and Wachovia Bank by Moody’s Investors Service – although they carry the same ratings from Standard & Poor’s.
Although the relative prices of the two banks' bonds do not account for recent turbulence in the global equity and credit markets last week, the price talk seems to reflect good investor demand for a new name in the Kangaroo bond market.
JPMorgan Chase’s debut is being led by by JPMorgan, Australia & New Zealand Banking Group (ANZ) and Westpac Institutional Bank. JPMorgan Chase’s strategy of not roadshowing before bringing its inaugural deal is unusual, but investors who participated in conference calls do not seem to be put off. “I am not that concerned about the lack of a roadshow because my main aim was to hear about the credit. I was able to do that on the call and also through the follow-up questions I asked,” explains Nerissa Chew, investment analyst at Aberdeen Asset Management in Sydney.
JPMorgan Chase is the third-largest US bank ranked by both its US$1.4 trillion total assets and US$117.7 billion total capital at the end of the first quarter this year. It is the only one of the top five US banks not to have accessed the Kangaroo market: along with Wachovia’s recent deal, Citigroup, Bank of America and Wells Fargo all have over A$3 billion outstanding in the Kangaroo bond market.
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Last Updated ( Thursday, 14 June 2007 )
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