By Aimee Donnellan
LONDON, Oct 9 (IFR) - Two European banks yanked their seniorbond deals from the market before pricing on Monday afternoon asinvestors proved wary of weaker peripheral names and remainunconvinced by Austrian unsecured debt.
UniCredit Bank Austria (A3/A) and Banco Popolare(Baa3/BBB-/BBB) struggled to find demand for their respectivefive- and long three-year deals, despite impressive order booksbuilt by rivals Intesa Sanpaolo (Baa2/BBB+/A-), Italy's largestretail bank, and Dutch F Van Lanschot (A-/A-) the same day.
"What we are seeing in the market is that not everyone hasaccess and there are boundaries that prevent certain deals fromgetting done," said a FIG banker involved in one of the pulledtransactions.
Some syndicate bankers say that investors are still shyingaway from anything other than national champions, while pricing,maturity and timing are also key to a transaction's success.
One banker considered the pricing on the Popolare deal to betoo tight, for example, while others said competing supplyhampered both pulled transactions.
Bank Austria opened books on its five-year deal, which wouldhave been its inaugural senior unsecured bond, at mid-swaps plus150bp via Bayern LB, DZ Bank, Erste, HSBC and UniCredit.
After pulling the deal, the lead managers said they will nowwork with investors over the coming days with a view to printinga transaction in the near future.
One lead explained that although investors were receptiveduring the roadshow, they had became more hesitant during thebookbuilding process, partly due to competing supply, and hadasked for more time to analyse the credit.
Bankers are confident that UniCredit can make a comeback.One said that the decision to pull the deal was a surprise, butsaid the issuer's association with UniCredit Italy may havetipped investors' preference towards Intesa.
"Although pulling a transaction is not ideal, it's not theend of the world either. It's better to get the maturity andprice right and meet with investors to ensure a more successfulouting next time," said one of the bankers.
NOT SO POPOLARE A resurrection for Popolare may be tougher, bankers said.
Popolare was also forced to pull its deal as the longthree-year maturity and guidance of mid-swaps plus 390bp areafailed to convince international investors to buy the bond.
Although the issuer had enough demand to price a sub-500mdeal, it decided not to do so, one banker said. Another observersaid that there was heard to be enough demand to do a EUR300mdeal.
"Given the demand on the Enel and Intesa trades, we thoughtthat we would be able to pick up some of the residual demand fora shorter dated deal at a more attractive spread," one of thebankers said.
Investment-grade Italian utility Enel attracted a book inexcess of EUR12bn for a dual-tranche EUR2bn bond on Monday,while Intesa's seven-year bond - the first unsecured deal from aperipheral issuer in that maturity for 18 months - notched up aEUR4.7bn book from more than 350 accounts.
"I think they did the right thing by pulling the trade andnot trying to jam it into the market," one of the bankers said,referring to the Popolare trade.
Observers said a shorter maturity for Popolare's deal wouldhave appealed more to investors that remain nervous about thelong-term health of the banking sector.
"Like MPS that came before it, Popolare is a difficultcredit that needs careful execution," said another banker.
Banca Monte dei Paschi di Siena (MPS) found lacklustredemand for its EUR500m two-year senior unsecured deal thatpriced at mid-swaps plus 450bp in September.
That MPS deal was trading around mid-swaps plus 440bp, soobservers said an additional 15bp-20bp on the Popolare guidancemight have made all the difference.
Intesa's and Dutch F Van Lanschot's deals could not havestood in sharper contrast as inflated order books provedinvestors needed little convincing of their credit quality.
Intesa's seven-year priced at mid-swaps plus 315bp frominitial guidance of plus 330bp, and carried a 4.375% coupon foryield-hungry investors that are looking to deploy cash inrelatively longer-dated safe credits.
Intesa followed up Mediobanca that sold a EUR500m three-yeardeal last Friday, which attracted a EUR2.8bn order book as theissuer took advantage of a squeeze in bank cash bonds.
Bankers are also more optimistic that there is now anestablished market for Intesa and Mediobanca.
Meanwhile, F Van Lanschot attracted a book of aroundEUR1.4bn for a EUR500m no-grow four-year unsecured bond atmid-swaps plus 225bp.
"There is clearly appetite for a broad spectrum of credits,"said one of the lead managers that included ING, JP Morgan, LBBWand Rabobank.
(Reporting by Aimee Donnellan; Editing by Natalie Harrison)
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Keywords: BANK BONDS/PULLED