London Stock Exchange Starts $2.5 Billion European Bond Sale

(Bloomberg) -- The London Stock Exchange Group kicked off the European leg of an international offering of bonds to refinance the debt that paid for its $27 billion acquisition of Refinitiv Holdings earlier in the year.

The exchange started taking orders on Friday for a four-part offering of euro and sterling bonds, according to a person familiar with the matter. The respective tranche sizes are set, and will not grow, according to the people, who asked not to be identified because they’re not authorized to speak about it.

The transactions came hot on the heels of a $4.5 billion sale of debt across five maturities in the U.S on Thursday, marking LSE’s first return to the international capital markets since 2018.

The European deal comprises 1.5 billion euros ($1.8 billion) of bonds in three 500 million-euro tranches -- four-year notes initially offered at about 60 basis points over the benchmark spread, seven-year debt at around 75bps and a 12-year maturity in the 95bps area.

A fourth 500 million-pound ($689 million) portion is marketed at approximately 110bps over the U.K. benchmark rate, according to the people.

Europe’s syndicated-bond market is experiencing a bumper year. Issuance is running at the fastest pace on record, largely driven by governments and companies bolstering their cash reserves in the face of the pandemic, and many of the year’s offerings have met orders for many times the debt on sale.

Nevertheless, LSE has encountered setbacks recently that may make some potential bond investors hesitate. Its shares fell the most in over a decade earlier this month after it said the cost of integrating Refinitiv would be higher than anticipated.

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Europe

Borrowers in Europe’s debt capital markets sold the highest number of fixed-rate bonds paying a zero coupon in any first-quarter period on record.

• The trend is due in part to central bank stimulus and investor demand tilting to shorter-duration debt as concerns swirl about inflation
• Europe’s third virus wave may delay the strong growth that was expected in 2Q, Iain Stealey, international chief investment officer of global fixed income at JPMorgan Asset Management told Bloomberg Television on Friday
• Vaccine progress in other parts of world mean re-openings will start coming through; that makes it “quite a challenging environment” for fixed income: Stealey
• Elsewhere, wider market sentiment is broadly positive, with Euro Stoxx futures rising for the first time in six days, while Asian stocks tracked U.S. peers higher
• Douglas is expected to price a bond and loan transaction later today, after reducing the initial planned size of the loans to upsize the bonds

Asia

Dollar bond sales from Asia excluding Japan rose for a second-straight week, though there were no debt offerings in excess of $1b.

• Issuance increased to $5.8b to Thursday from $5.3b last week, though CAR Inc. and Lionbridge Capital are marketing notes Friday
• Naver, South Korea’s no. 1 search-engine operator, priced its debut deal in U.S. dollars, selling a $500m sustainability note
• In China, China SCE Group sold a $300m junk bond, while Macau’s MGM China Holdings priced a $750m high-yield note
• For a second week, the biggest dollar deal from Asia came out of Japan, with Nomura selling $3.25b of securities, including a 10Y tranche

U.S.

MGM China Holdings, Dycom Industries, Oasis Midstream and Interior Logic Group are also in the high-yield pipeline and slated to sell notes. Meanwhile four other borrowers are in the market with debt deals that may wrap up before the end of the month.

• London Stock Exchange Group Plc is tapping the U.S. high-grade bond market to help refinance debt it took on related to its acquisition of Refinitiv Holdings Ltd.
• Green bonds. Blue bonds. Brown bonds. Environmentally-conscious investors may soon be able to buy a different color of asset every day of the week

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