Poland's re-entry into the samurai market is successfully received by the Japanese investor community
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Caroline Klein, Business Communication
Daiwa Capital Markets Europe Limited
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6 November 2009
Tokyo - On November 6, 2009, Republic of Poland (“Poland”) successfully revisited the Samurai bond market with the pricing of its eighth and ninth Samurai bond issues. The single A rated public Samurai transaction, via Joint Bookrunners Daiwa Securities SMBC Co. Ltd, Mizuho Securities Co Ltd and Nomura Securities Co. Ltd had a total issue size of JPY 44.8 billion. The dual-tranche, three-year and five-year offering was well received by investors.
The Samurai bond issues were launched with the following terms and conditions:
|
Issuer |
Republic of Poland |
|
|
Rating |
A2 (Moody’s) / A- (JCR) |
|
|
Series |
#8 |
#9 |
|
Issue Size |
¥23.3 Billion |
¥ 21.5 Billion |
|
Maturity |
13th November 2012 |
13th November 2014 |
|
Coupon (s.a) |
1.92% |
2.34% |
|
Issue Price |
100% |
100% |
|
Re-Offer Yield |
1.92% |
2.34% |
|
Re-Offer Yield Spread Reference |
¥L+120 bps |
¥L+140 bps |
|
Lead Managers |
Daiwa Securities SMBC Co., Ltd Mizuho Securities Co., Ltd Nomura Securities Co., Ltd |
|
|
Fiscal Agent |
Sumitomo Mitsui Banking Corporation |
|
The transaction follows a Tokyo roadshow last week comprising a group presentation and a series of one-on-one investor meetings by a senior delegation from the Ministry of Finance and National Bank of Poland headed by Dominik Radziwill, Undersecretary of State.
The issue was placed overwhelmingly with Japanese institutional investors - both repeat investors from Poland’s previous issues and also accounts buying the credit for the first time. Particularly pleasing was the positive impact on the book of the marketing trip one week prior to launch, which provided an opportunity to deliver an update on the Sovereign’s credit story to Japanese fixed-income investor community following the previous non-deal roadshow conducted by Poland in late 2008. The demand breakdown at each maturity saw participation from all the active Samurai investor groupings in 2009; City Banks, Trust Banks, Specialized Banks, Life Insurance Companies, Asset Managers, Regional Banks and Shinkin Banks.
The issue follows Poland’s debut ¥25bn 7 year Samurai issue in 2003, a ¥50 bn 5 year issue in 2004, a ¥75bn 7 year issue in early 2005, a ¥50 bn 15 year 3 month issue in November 2005, a ¥25 bn 10 year and ¥60 bn 20 year 2-tranche issue in November 2006, and a ¥50 bn 30 year issue in 2007. Poland has also issued several long dated Euroyen private placements. This year the first of Poland’s Samurais has matured (the ¥50bn 2004 issue) and 2010 sees the redemption of the ¥25 bn 7 year debut issue from 2003.
The new deals began as a Yen 25 billion transaction but grew in size on the back of positive investor feedback at the tighter end of the marketing range. They were eventually capped at Yen 44.8 billion or approximately US$500 million, reflecting the fact that Poland has now met all its 2009 funding requirements.
The pricing achieved was competitive with the Republic’s secondary levels (the 07/12 Dollar deal was quoted at $L+145 at time of pricing, the 02/13 Euro deal at €+137, and the 02/14 Euro deal at €+143). Poland’s most recent public market issue was a 5 year 750m CHF issue launched in August at a spread of MS+138.
Poland’s single A credit ratings from Moody’s and JCR reflect a sound economic story. Poland was the only EU Sovereign to record positive GDP growth in Q2 2009 (y/y basis), and has strong public debt to GDP levels, within Maastricht convergence criteria. The economy has a sound and efficient banking sector and had the added support of large inflows of EU funds. Poland’s issue is the third single A rated Samurai issue since the summer, following issues by Korea Development Bank and Industrial Bank of Korea.
This transaction is the first pure Sovereign Samurai transaction in 2009 and the first issue from the CEE region since the 2007 issues by the Republic of Poland and Republic of Hungary. Its success in reopening the Sovereign sector post crisis provides excellent opportunities for other issuers to follow in 2010.
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