Issue: Daily News - 3 November 2010
By Euroweek Reporter
Italy’s Banca Popolare di Vicenza sold a Eu155m floating rate note on Tuesday — its largest private placed bond since 2005 and its first outing in the market since March.
The three year note, dealt through Royal Bank of Scotland and sold at par, pays a coupon of 200bp over six month Euribor for the first two years, stepping down to 40bp over for the remainder.
Banca Popolare di Vicenza sold a Eu500m two year floating rate note in the public market late in September. That paid 155bp over three month Euribor and was sold at par.
"The 200bp coupon would be a decent premium on the two year FRN issued in September,” said Dietmar Tzschentke, bank credit analyst at UniCredit in Munich.
“That steps down to plus 40bp in May 2013 — the investor is betting that Euribor will go up in two years time to compensate for the step down in spread."
Aside from the Eu500m public deal sold late in September, this is the bank’s first outing in the European bond markets since March, when it sold a Eu120m floating rate private placement due 2012, according to Dealogic. That deal paid a coupon of 80bp over three month Euribor and was issued at 99.8.
It is also the issuer’s largest private placement since September 2005, when it sold a Eu300m two year floating rate note via HSBC, according to Dealogic. That note paid a coupon of 10bp over three month Euribor and was issued at 99.951.
Italian banks are less affected by sovereign debt fears than those of other Southern European countries such as Spain and Portugal, which should help their ability to issue debt, said analysts.
"As with all the Italian banks — Banca Populare di Vicenza's ability to issue in the capital markets will be less impacted by sovereign headline risk and volatility than Irish, Portuguese or Spanish banks, for example," said Tzschentke.
Floating rate notes (FRNs): are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a spread. The spread is a rate that remains constant.
Almost all FRNs have quarterly coupons, i.e. they pay out interest every three months, though counter examples do exist.
At the beginning of each coupon period, the coupon is calculated by taking the fixing of the reference rate for that day and adding the spread. A typical coupon would look like 3 months USD LIBOR +0.20%.
Par: The value that a share in a company had originally Banca Popolare di Vicenza: Banca Popolare di Vicenza (BPVI) was established in 1866.
For more than 140 years the Bank has been offering retail and corporate banking services. Its headquarters are located in Vicenza, in Italy.
Premium: an extra payment added to the basic rate
UniCredit: UniCredit is a major international financial institution with strong roots in 22 European countries and an international network present in approximately 50 markets, with 9,578 branches and more than 162,000 employees.
In the CEE region, UniCredit operates the largest international banking network with around 4,000 branches and outlets.
The Group operates in the following countries: Austria Azerbaijan, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Germany, Hungary, Italy, Latvia, Lithuania, Kazakhstan, Kyrgyzstan, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey and Ukraine.
History
The group's origins date back over five centuries to the establishment of Rolo Banca in 1473, when Monte di Pietà, a public institute providing secured loans, was created in Bologna.
More recently, the UniCredit is the result of the merger of nine of Italy's largest banks and the subsequent combination with the German HVB Group and the Italian Capitalia Group.
Euribor: The Euro Interbank Offered Rate ‘EURIBOR®’, which is the money market reference rate for the euro.
European Bond Market: A public market (more details see another page)
Dealogic: provides a platform for investment banking and capital markets professionals globally to help improve strategy, competitiveness, and execution.
The platform incorporates technology, data, analytics and consulting to help investment banks better understand their clients and the competitive landscape so they can allocate resources and execute deals more effectively.
History
Dealogic was established in the UK in 1983 by Simon Hessel, Peter Ogden and Philip Hulme. In 1991 the Group acquired the assets of a US capital markets communications business headed up by Tom Fleming which provided the Group with an established customer base in the US securities industry.
Through carefully managed growth Dealogic now employs over 400 people and has offices in London, New York, Hong Kong, Tokyo and Sydney.
Due: When a sum of money is due, it must be paid immediately
Sovereign debt: A sovereign bond is a bond issued by a national government.
The term usually refers to bonds issued in foreign currencies, while bonds issued by national governments in the country's own currency are referred to as government bonds.
The total amount owed to the holders of the sovereign bonds is called sovereign debt.
Medium-term notes (MTNs): are debt securities with maturities that range from 9 months to 30 years or longer.
Tap: to choose sb to do a particular job
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