The maiden Pfandbrief issue in dollars ran into trouble beyond the control of the issuer or the lead manager. Yet success was snatched from the jaws of defeat. In the end, Rheinische Hypothekenbank's 10-year $750 million issue flew.
On June 3, the day the deal was launched, there was an unexpected flood of 10-year dollar paper: two borrowers much better known, especially in the Asian markets, were also issuing that day, the Asian Development Bank and Toyota Motor Credit Company, so a certain number of Asian investors were bound to be lost. The final placement in Asia was just 8%, well below both hope and expectation.
Others involved in the syndicate put some of the blame on the pricing of Rheinhyp's paper: "They launched at 23bp, just five blips above the ADB," says one syndicate head. "For an issuer with little track record, that's pretty crazy."
For Yann Gindre, global head of debt capital markets at Commerzbank, the spread was more than acceptable for a triple-A credit. "But it was unlucky timing which saw some $2 billion targeted at Asia at the same time.