Standard Chartered goes longer in sterling Tier 2

Standard Chartered took advantage of conducive market conditions to secure duration with a £900m (Eu1.3bn, US$1.54bn) 20 year Tier 2 deal on 3 June, its first subordinated debt transaction in sterling since April 2008.

The bullet deal was launched into a “viable” market that had over the preceding weeks absorbed a £1bn 15 year Tier 2 deal for Rabobank in early May and a £750m 15 year Tier 2 issue for BPCE in early April, noted a syndicate banker at one of the leads — Barclays, Credit Suisse, Lloyds and Standard Chartered.

Standard Chartered, meanwhile, opted for a 20 year maturity, a move along the curve that did not require paying up on a credit basis, according to the syndicate official.

“They were happy to take duration,” he said.

The £900m 5.125% June 2034 was priced at 195bp over Gilts, which followed initial price thoughts of 200bp-210bp over. More than £2bn of orders were placed for the deal. Rabobank’s £1bn deal came at 165bp over Gilts.

The sterling transaction is Standard Chartered’s second benchmark subordinated deal this year, coming after a US$2bn 5.7% 30 year in March. The sterling securities were at the end of June said to be trading at 203bp over Gilts, with credit-specific issues said to behind the widening.

UK investors took 91% of the Tier 2 bonds, other European accounts 8%, and others 1%. Asset managers were allocated 56%, insurance companies and pension funds 8%, hedge funds 7%, corporates 5%, banks 1%, and others 3%.