(upd3) The order book for GEK TERNA's bond closed with bids reaching 2.3 billion euros and at a slightly lower interest rate compared to initial guidance, specifically mid-swap plus 140 basis points. The company raised 500 million euros.
What BN reported earlier
Bids for GEK TERNA's bond stood at approximately 2 billion euros shortly after 14:00, raising hopes for a slightly lower interest rate. The issuance process for GEK TERNA's new 7-year Eurobond is underway and recording heightened demand. It is reporting a 4-fold oversubscription. The spread is expected to narrow compared to the initial opening.
What BN initially reported
Following high volatility in the stock during Friday's session, it appears GEK TERNA decided to enter the markets, although Santander was saying it could wait and that the ability to postpone constituted a sign of strength. Now it comes out seeking 500 million euros with pricing at 165–170 basis points above the mid-swap reference rate. Initial estimates by market executives place the interest rate around 5%–5.10%, with bids submitted so far standing slightly above 1.5 billion. The bond carries a Baa3 rating from Moody's and BBB- from S&P, and will be listed for trading on the Luxembourg Stock Exchange. Settlement will take place on November 2, with maturity set for 2033. It will be governed by English law. Global Coordinators are BNP PARIBAS, J.P. Morgan (B&D), Mediobanca, with the order book also being run by AXIA, Citigroup, Deutsche Bank, Eurobank, Goldman Sachs Bank Europe SE, HSBC, Morgan Stanley, National Bank of Greece, Piraeus Bank, and Optima Bank. The stock stands at 38.88 euros with a gain of +0.99%, on volume of 197 thousand shares and capitalization at 4.62 billion euros.
What Santander was saying
Jitteriness in the bond market and solid Q3 performance from operational motorways under GEK TERNA make the infrastructure Group's stock an investment opportunity, Santander noted in an informational memo last Friday. As the firm explained, GEK TERNA's decision not to proceed with issuing a Eurobond—a move for which it holds a twelve-month window—should be interpreted as a sign of strength and an action to protect its shareholders. This is because the Group possesses abundant liquidity at the parent level and therefore has no pressing need to issue a bond. Consequently, as Santander commented, the market reaction to the stock on Friday lacked foundation and constituted a buying opportunity, following the robust performance delivered by motorways belonging to GEK TERNA's concessions portfolio. Given these facts, the firm issued a target price of 62 euros, maintaining an outperform recommendation.
What BN had reported regarding the temporary postponement of the issue last Thursday
A temporary postponement in issuing the GEK TERNA bond of up to 500 million euros was decided a short while ago, according to information obtained by BN. Information indicated that the issuance would begin today, but prevailing market conditions led to the deferral. It should be noted that from the moment the issue was announced, concerns arose since government bonds were under pressure, while corporate bonds followed the same trajectory. Thus, analysts noted that if it hit the markets, it would be priced with an interest rate above 5%. In fact, certain reports indicated that the company expected a rate of 4.5%, but initial estimates were that investors were pricing it even above 5.5% and toward 5.8%. Today, France's 10-year bond surpassed 5%. Overall, GEK TERNA has raised concerns among investors, as on one hand it emphasizes that it holds high liquidity, but on the other hand it attempted to issue a bond under such conditions. The stock, although closing with a marginal gain today, has faced heavy pressure recently. From the 48 euros it had reached, it has dropped below 39 euros. Part of the decline is attributed to the fact that while the company contends it holds high liquidity and presents leverage on a net basis excluding concession debt, shortly after its capital increase, it had announced a new bond issuance to repay an older one. Overall corporate borrowing remains high and has impacted the stock's performance.
G.K.
www.bankingnews.gr
Σχόλια αναγνωστών