Nordic Investment Bank (NIB), the multilateral institution established in 1975 by Denmark, Finland, Iceland, Norway and Sweden, has hit the Taiwan debt market with a NT$7 billion ($200 million) offering. Salomon Smith Barney, part of the Citigroup, was brought in to act as lead manager on the deal.
NIB’s business includes granting loans and guarantees for projects, both inside and outside of the Nordic region, that are considered to be mutually beneficial to the Nordic countries and the borrower.
With its transaction, NIB becomes the third multilateral to issue in Taiwan this year, following a NT$4 billion deal launched in April by the Inter-American Development Bank (IADB) and a NT$9 billion issue from the European Investment Bank (EIB) in May.
NIB's deal features two fixed rate NT$3.5 million tranches with maturities of three and five years, both of which priced at par. The shorter-dated piece carries a coupon of 3.55%, 1 basis point below treasuries, while the five-year notes carry a 3.65% coupon, a spread of four over the government benchmark.
The tight pricing reflects the issuer’s triple-A status, as rated by Moody’s Investors Service and Standard & Poor’s, as well as the currently favorable climate for issuance in Taiwan. “The deal was helped by good distribution and that these kind of issuers can always price tight against government bonds,” a source close to the deal says. “Issuers like NIB will also come to Taiwan because they can meet their targets on a swap basis.”
Of the three multilateral deals that have been launched in Taiwan in 2001, the NIB transaction is closest to the EIB deal that was lead managed by ABN Amro, with the co-leads being China Securities and Fubon Securities.
That deal featured a NT$3 million four-year tranche with a 3.62% coupon, NT$5million of five-year notes that priced at 3.72% and NT$1 billion of seven-year bonds which carry a 3.83% coupon.
The IADB transaction however, lead managed by Grand Cathay Securities, left some local bankers puzzled by its complexity. The criticism was not so much because of pricing — spreads have come in considerably since April — but because of its structure.
Four NT$1 million tranches were featured, but the difference in tenures was just 6 months between the shortest maturity (18 months) and the longest (2 years). Consequently, the difference in coupon pick-up between the different tranches, 4.01% for the 18-month notes and 4.05% for the two-year bonds, was so small that some observers were left scratching their heads as to why the deal was split into four pieces in the first place.
