Successful debut of FMS Wertmanagement's euro benchmark bond
FMS Wertmanagement, the winding-up institution owned by the German government that took over the risk positions and non-strategic operations of the HRE Group in the autumn of 2010, yesterday successfully issued a five-year bond with a volume of EUR 3 billion in the capital market. At a volume in excess of EUR 1 billion, this is the company’s first benchmark bond. It was floated as part of a funding plan that provides for an issuing volume of EUR 20 to EUR 30 billion per year.
The debut issue met with lively demand. The banking syndicate closed the order book within 30 minutes, with a total order volume of more than EUR 11 billion. At 10 basis points above the mid-swap, the pricing was at the lower end of the envisaged price range. Demand from Germany (about 27%) was strongest, followed by Scandinavia (22%), the United Kingdom (18%) and Asia (14%). Demand from fund and asset managers was particularly pronounced (47%), while central banks (18%), banks (18%) and state-owned/supranational institutions (10%) also displayed a strong interest.
Extensive discussions with investors and road shows both in Germany and abroad had taken place ahead of the transaction.
“This transaction is an extraordinary success for FMS and its future issue plans,” said Ernst-Albrecht Brockhaus, the company’s Management Board member responsible for its Treasury/Markets division. "It is proof yet again that Germany is perceived to have an excellent credit rating in the international capital markets."
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