Prize issues
6
financial markets
What's NewS Issue 12 December 1996
Rabobank has been presented with the prestigious Eurobond
of the Year 1996 award by Corporate Finance magazine, the
authoritative London-based monthly for finance professionals
which is devoted entirely to corporate financing, mergers and
acquisitions (M&A), treasury and capital markets.
The award was based on the Eurobond
issue for Royal Netherlands PTT (KPN),
the Dutch telecoms and postal group,
which Rabobank lead-managed in June,
and it underlines a growing awareness
among market participants of Rabobank's
reliable performance and placement power
in fixed income issues overall. Because the
10-year, NLG 1 billion senior debt issue
The team s Liz Merica - happy
was KPN's first call on the capital market
as a private corporate player, it was
therefore particularly delicate and its
success was an absolute necessity.
SUPERBJOB
The Origination and Syndication
Department's placement of the record-
breaking Eurobond was so heavily
oversubscribed that it was increased by NLG
300 million four days later. 'Syndication
went so smoothly that we even had to turn
down a few banks who wanted to
participate,' said one salesman afterwards.
(The issue, which matures in the year 2006
and carries a coupon of 6.5 percent, was co-
managed by ABN Amro Hoare Govett, ING
Barings, and SBC Warburg.) In the view of
Corporate Financewhich announced the
award in its December issue which is sent to
a readership of more than 10,000 finance
professionals, Rabobank 'did a superb job of
whipping up investor appetite.'
BIGGEST BOND
Roughly 60 percent of the paper was
placed among institutional (and some
retail) clients in Holland, and roughly 40
percent went to investors in other European
countries including Switzerland, Germany,
Belgium, and Luxembourg. The mandate to
lead manage this decisive issue was the
outcome of a relationship that Rabobank
cemented during the earlier, highly-
publicized, and very successful first stage of
KPN's two-stage privatization. The bond
was about four times the size of the average
corporate issue in the Netherlands and
indeed constituted one the largest corporate
bonds ever launched on the Dutch market.
Thus, success was particularly gratifying
for Rabobank's team and the proceeds are
now helping KPN finance essential
investments in new technology and services.
TRIPLE SCORE
According to Corporate Financethree
factors helped seal the issues' success. First,
Rabobank very skillfully fueled the market's
speculation about KPN's expected credit
rating. Investors were only informed of the
strong Aal and AA+ rating (from Moody's
and Standard Poor's respectively) just
after the launch, which served to give an
added fillip to the attraction of KPN's
already strong household name. Secondly,
the extensive scale-back of Dutch
government borrowing on the market had
produced a situation of pent-up demand for
high quality long-term Guilder paper - just
at a time when institutional buyers were
rewriting their guidelines to permit more
substantial investments in Eurobond issues.
A third factor, according to Corporate
Finance, was the rarity of the issue itself.
KPN gave investors an alternative to the
usual supranational issuers and the familiar
banks that predominate in the 10-year field.
PRESTIGE ISSUES
Indeed Rabobank has been increasingly
active in the long term Eurobond market,
where it has recently lead managed issues
for Royal Hoogovens (valued at NLG 200
million), for Achmea Hypothekenbank
(NLG 200 million), Van Lanschot Bankiers
(NLG 350 million), Bank voor Nederlandse
Gemeenten (NLG 1.5 billion), Kredietbank
International Finance (NLG 200 million),
Landeswirtschaftliche Rentenbank (NLG
200) and DePfa-Bank (NLG 200 million).
The prestigious Hoogovens deal was sold
within half an hour of its launch. The deal
for Achmea, a pooled treasury belonging to
several Dutch mortgage banks, was also
sold quickly on the first days' trading. The
highly successful Van I.anschotBankiers
exercise was also, like KPN, an important
debut issue, while the jumbo Bank voor
Nederlandse Gemeenten bond exceeded
even KPN's in its sheer size. Of the proceeds
from the Kredietbank International Finance
subordinated debt issue, which was largely
pre-placed among institutional investors
and property developers in the Benelux, a
portion was swapped into floating-rate
guilder funds.
CONSISTENT PERFORMANCE
As a result of these and other highly
successful deals, Rabobank ranked in late
October just behind its much larger rival
ABN Amro but ahead of ING Bank as one of
the top-three bookrunners of guilder-based
Euro- and international bond issues, having
handled 15 issues valued at a total 6.8 billion
(or one-quarter of the total market) since the
start of the year. This figure is expected to
increase to some NLG 7.5 billion by years'
end as issue sizes and overall business volume
increase. If there is a common threat that
joins this tapestry of deals together, it is that
'investors have clearly come to believe that
we can consistently deliver good performance
and attractive spreads,' says Johan Roepman,
the man who was instrumental in managing
the successful KPN deal.
News of the Eurobond of the Year 1996
prizes - which were also awarded to Abbot
Laboratories, Parmalat, Petronas and Walt M
Disney - is now spreading among
corporate treasurers of the top 500
corporates both in Europe and the US who
form the core of Corporate Finance's
international readership base.
EUROBOND OF THE
YEAR AWARD
Het prestigieuze blad
'Corporate Finance'heeft
onze bank de 'Eurobond of the Year'-prijs
toegekend voor de door ons in juni dit jaar
geleidde KPN obligatie-emissie van NLG 1,3
mrd. Deze prijs onderstreept het bewustzijn
in de markt van onze kennis en
plaatsingskracht op dit gebied. De reden voor
de toekenning is dat de emissie vier keer zo
groot was als gebruikelijk op de Nederlandse
markt, waarbij deze door goede
marktbewerking zwaar overtekend werd en
zelfs de verhoging van het oorspronkelijke
bedrag van NLG 1,0 mrd. tot 1,3 mrd. nog niet
toereikend was om aan de vraag te voldoen.