Issuer: Natexis Banque
Amount: $500 million
Launched: October 16
Lead manager: Tokyo-Mitsubishi International, Dresdner Kleinwort Benson and Merrill Lynch
One clear lesson emerges from the $500 million debut Eurobond for Natexis Banque: the name of the borrower still matters a lot to Euromarket investors.
On fundamentals alone, the deal should have been a blow-out. It was guaranteed by the Republic of France, which gave it triple A ratings and meant it was investors' first chance since 1995 to pick up French guaranteed debt in dollars. The deal's three-year maturity made it less volatile than the five- and 10-year paper that predominated in the Eurodollar primary market at the time. What's more, the launch spread of 14 basis points over treasuries was 5bp wider than the most aggressive bid the borrower received.
Trouble is, many investors didn't know the name. Natexis Banque was created only in June this year from the merger of two French financial institutions, Crédit National and Banque Française du Commerce Extérieur (BFCE). Although both were veteran Eurobond issuers, some investors demanded a higher premium for the new name. Others at first could not buy the bonds at all. "They had to go and get lines to buy the paper - regardless of the fact that it came with the guarantee of France," says Denis Kelleher, syndicate manager at Tokyo-Mitsubishi International, which was joint bookrunner for the issue with Dresdner Kleinwort Benson and Merrill Lynch.