Vonovia Fires Up German Debt Market’s Year With Benchmark Deal

(Bloomberg) -- Vonovia SE is kicking the year off in style for the Schuldschein market with a 500 million-euro ($565 million) deal that’s the largest since mid-2020 based on its size at launch.

Average pricing for Schuldschein, hybrid debt instruments that combine characteristics of loans and bonds, has now fallen close to pre-pandemic levels.

That’s opened the door for Vonovia, which raised about 30 billion euros last year on mainstream bond and loan markets, to expand its funding options, said Fabian Lander, head of front office for finance and treasury at the German real estate firm. 

“Pricing is attractive now compared to the bond market,” he said by phone.

The German debt market hasn’t seen a deal as big as Vonovia’s at launch size since an issue for auto-parts maker Robert Bosch GmbH in May 2020. That transaction was later increased to 2 billion euros.

Vonovia’s offering could be increased further, depending on demand, according to people familiar with the matter. At least two thirds of deals in 2021 were increased from their original marketed sizes due to high demand as investor chased a limited supply of deals.

Here are some more details of Vonovia’s Schuldschein:

• Tranches from five years to 30 years offered
• Lead banks are BNP Paribas SA, Landesbank Baden-Wuerttemberg and UniCredit
• Proceeds are for general corporate purposes and to refinance existing debt
• Vonovia last sold Schuldschein in 2019, raising 50 million euros via a private placement
  • Vonovia Issues Schuldschein on Digital Platform for First Time

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