BBVA is the early-bird Spanish bank in the debt markets in 2016. Once again, it is the first Spanish bank to make an offering on the market in euros of 1 billion euros in 5-year senior bonds. The issue has been very favorably received. International demand exceeded 2.4 billion euros, which has enabled the bank to offer at more competitive prices than initially forecast.
Once again this year, BBVA is the first Spanish bank to issue debt denominated in euros. It did so yesterday morning, 11 January, with an unsecured senior issue with a 5-year maturity for a total amount of 1 billion euros. The banks involved in the issue in addition to BBVA were BNP, UBS, Nomura and Barclays.
This issue is line with BBVA’s usual operating practice, aims to fund the structure of its balance sheet through the windows of opportunity that open up in the market. BBVA has managed to spot the opportunity, in spite of the high volatility, to issue at highly competitive prices. In fact the offer price for the issue was potentially in the midswap+95 basis point range, but the intense interest from the market (demand at one point was up to 2.4 billion euros) led to a drop in the price to midswap+85 basis points.
Demand was not only high, it also had a very significant international component. The issue by countries highlighted a wide range of distribution, and was headed by Germany and Austria (27%), followed by France (20%) and Spain (16%). Other investors were from Britain (12%), Benelux (9%) and to a lesser extent, the Nordic countries, Italy and Asia.
In terms of investor type, asset managers showed the highest interest, with 58% of the demand. Banks (22%) and insurance companies/pension funds (13%) also featured prominently.
In short, as indicated by Erik Schotkamp, BBVA’s Capital Management and Wholesale Funding Director, “In a scenario of very low rates and high market volatility due to China, BBVA has once again demonstrated its strength. There has been widespread interest from the market, as evidenced by the high international demand and the execution process, which was extremely fast”. The operation closed in under two hours.
BBVA had not issued any public senior debt in euros since January 2014, when the issue, with identical characteristics to yesterday’s, was offered at a substantially higher price. Specifically the bond offering price was midswap+118 basis points.