IT Update
EAL OF THE MONTH
y
What's NewS Issue 7 July 1996
short news
19
The deal: NLG 1 billion
Eurobond issue.
The cliënt: Royal Netherlands
PTT.
The players: enough
Rabobankers around the
world to fill this whole page.
In other words, a text-book
example of international
networking.
On June 10, Rabobank's
origination and syndication
department placed a record-
breaking NLG 1 billion
corporate Eurobond issue for
earlier, highly-publicised, and
very successful two-stage
privatisation. The market's
enthusiastic reception for the
10-year NLG 1.3 billion senior
debt issue was also gratifying
because it was KPN's debut
call on the capital market as a
private player - such debut
offerings are always delicate
because their success is an
absolute necessity.
Among the co-leads on this
bond - which matures in the
year 2006 and carries a
coupon of 6.5 percent, - were
ABN Amro Hoare Govett,
ohan Roepman
Royal Netherlands PTT (KPN)
which was so heavily
oversubscribed that it was
increased by NLG 300 million
four days later. 'Of course we
were delighted to bring such a
successful issue for KPN,' says
Johan Roepman, who
managed the deal. 'This bond
was four times the size of an
average corporate issue, and
was without a doubt the
biggest corporate bond ever
launched on this market.'
The proceeds will help KPN
finance essential investments in
new technology and services.
The fact that Rabobank won
»ie mandate can be seen as a
}nsequence of its strong
performance and placement
power in fixed income issues,
and builds on a relationship
established during KPN's
ING Barings, and SBC
Warburg. It was attractively-
rated at Aal (by Moody's) and
AA+ (by Standard Poors) on
the very morning of its launch,
thus confirming KPN's high
creditworthiness.
Roughly 60 percent of the
issue was placed among
institutional and some retail
clients in Holland, and roughly
40 percent to European
countries abroad, mainly
Switzerland, Germany,
Belgium, and Luxeinbourg.
'The deal was orchestrated
well,' wrote the International
Financial Review. 'Early in the
morning, the mandate was
officially awarded to
Rabobank. Soon afterwards
the terms were disclosed,
followed by the release of the
rating assignments.'
One Rabobank salesman adds
that: 'syndication went
extremely smoothly and we
even had to turn down a few
banks who wanted to
participate in the syndicate.'
Indeed, the original NLG 1
billion issue was almost fully
placed within hours of its
introduction. The transaction's
launch spread was 26 basis
points (bp) over the curve and
27 bp over the comparable
Dutch state loan. During
launch day, the spread feil
below the 25 bp level and by
Thursday it had dropped to
23 bp. The NLG 300 million
increase on Friday was
welcomed at a 23.5 bp spread.
According to one competitor
quoted by Euroweek's
International Bond Issues
Reviewthis was 'the first 10-
year plain vanilla we have seen
for a long time and a very
interesting transaction. It has
been a great success and the
spread has already come in on
the back of very strong
demand from a range of
investors.' Another added
that it was 'a very nice deal. It
is great to have a rated
corporate on the spectrum of
potential Dutch issuers in this
market.'
DEAL OF THE MONTH
De Rabobank kreeg het mandaat voor KPN's eerste
Eurobond issue. Deze obligatielening van in
totaal NLG 3 mrd. is vier keer zo groot als wat
gemiddeld voor bedrijven gedaan wordt. Na vier dagen werd het
oorspronkelijke bedrag van NLG 1 mrd.al verhoogd. De International
Finance Review alsook collega banken hadden niets dan lovende
woorden. Succes door partnership. Ook intern, want het aantal
collega's dat hieraan meewerkte beslaat ongeveer een hele bladzijde.
Rabobank International's
recently-approved long-term
information technology (IT)
plan has now swung into a
new phase:the definition and
implementation of common
standards of operational
excellence - to apply
throughout the entire
International branch network -
in pursuit of shared business
goals.
The program man
agement team is now in place
- under the direction of the
Program Steering Committee -
and project teams are also
taking shape.
User committees will soon
be established in order to
represent the interests of the
branches.This reflects a
conviction that their active
participation in the IT program
is a prerequisite to its
successful implementation.
Once mobilisation is
complete, the immediate focus
of the program will be to
conduct a number of business
reviews.These will assess the
needs and priorities of the
branches. Meanwhile, work will
continue on the planned
implementation of Devon and
Eximbills.together with work
to deliver an operational
branch in Budapest.