Regional demand strong for Australian dollar tier-two

Crédit Agricole priced a A$600 million (US$412.7 million), 15-year non-call 10-year tier-two EMTN deal on 21 May. The deal surprised to the upsize on volume and brought significant diversification of investors according to Crédit Agricole CIB’s syndicate in Australia and Hong Kong, who say the result was sufficient to pique the issuer’s interest in further Australian dollar issuance.

According to KangaNews data, the deal was double the size of any Australian dollar tier-two EMTN priced in the last 18 months (see chart 1). Credit Agricole printed its its previous Australian dollar transaction in June 2017, in senior nonpreferred format.

According to a syndicate director at another lead manager, the deal has tightened a further 20 basis points in the secondary market, with demand reflective of the yield offered in comparison with the 10-year swap rate, which has tightened significantly in recent weeks.

Source: KangaNews 23 May 2019

Deal pricing

Issuer: Crédit Agricole
Issuer rating: A+/A1/A+
Issue rating: BBB+/Baa2/A
Pricing date: 21 May 2019
Call date: 29 May 2029

Maturity date: 29 May 2034
Volume: A$600 million
Margin: 238.3bp/mid-swap
Indicative margin tightening: 15bp
Geographic distribution: see chart 2
Lead managers: Crédit Agricole CIB, National Australia Bank and Nomura

Source: Crédit Agricole 23 May 2019

“There were more than 60 investors in this transaction, many of which were either not frequent participants in Crédit Agricole deals or were new to this part of the capital structure.”

“Senior funding executives from Crédit Agricole undertake two nondeal roadshows in Asia each year, the last of which was in March. This encouraged the issuer to make its Singapore dollar debut in April as well as to undertake this Australian dollar transaction.”

“The issuer has in the past been opportunistic in its access to the Australian dollar market. But on the strength of this deal it may be encouraged to undertake further issuance in other formats later in the year.”