On Tuesday, 18th October 2022 FMO priced a successful EUR 500 million 5-year fixed rate Sustainability Bond (no-grow). Joint Lead Managers on the deal were Citi, Credit Agricole CIB, HSBC Continental Europe and Rabobank. For the full-year 2022, FMO had funding needs of about USD 1bn. Out of this, FMO has already issued one 3-year USD 500m benchmark issue, as well as private placements in LCY and USD. FMO has accelerated this EUR Sustainability Bond issue planned for Q1 2023 due to additional funding need stemming from a strong pipeline into year-end and an outflow of cash collateral. The new Sustainability Bond has been issued under FMO’s Sustainability Bonds Framework (SBF), and proceeds will be used for the financing or refinancing of eligible green and social projects, or to repay a note issued under the SBF. as per the bond use of proceeds clause.
The new benchmark offers a coupon of 3.000% and spread of -12bps vs. Euro mid-swaps, equivalent to +90.4bps over the OBL 1.3% Oct-27. This transaction also represents FMO’s first EUR denominated benchmark since March 2020, and marks a highly successful return to the EUR SSA market.
On Friday 14th October, the mandate for a new EUR 500m 5-year Sustainability bond was announced alongside a series of investor calls to be held on Monday 17th October. Strong interest from the investor community meant that FMO subsequently held several joint calls with multiple investors at a time on Monday. The following day, books officially opened at 09:40 CET, alongside guidance at MS-11bps area and the size which was communicated at EUR 500m no-grow.
The transaction saw strong momentum from the outset, with books reaching EUR 700m by 11:00 CET and comprising a high proportion of quality demand from European bank treasuries and pension funds, as well as global CBs and Official Institutions. At this point also, the spread was fixed at MS-12bps.
By the time books closed at 11:30 CET, final orders topped EUR 1bn (excluding JLM interest). The deal was thus more than twice covered by quality demand.
Even after the spread was tightened by 1bp, the orderbook still retained its quality and volume, and the transaction ultimately priced at 13:50 CET at a spread of MS-12bps, and a re-offer price and yield of 99.968% and 3.007%, respectively.
With a total of 45 investors participating, CB/OIs took 31% of total allocations, along with Banks also at 31%, followed by Pension Fund/Insurance at 26% and Asset Managers at 12%.
The regional distribution of investors saw Dutch investors take 44% of allocations, followed by Germany/Austria/Switzerland (DACH) at 16%, Belgium at 8%, Southern Europe at 7%, UK/Ire at 6%, Nordics at 5% and others at 14%.