Alpha green debut gets ‘phenomenal’ book in IG return
Alpha Bank’s inaugural green bond and first senior issuance since it regained investment grade status, a €500m six non-call five senior preferred bond, attracted a peak book above €3bn and final book above €2.5bn at a minimal NIP on Thursday, cementing its position in the mainstream IG market.
The Greek bank’s positive rating trend was demonstrated the previous Thursday (16 October), when Moody’s lifted its long term deposit ratings from Baa2 to Baa1, senior non-preferred debt from Ba1 to Baa3, and AT1 from B1 to Ba3 on the back of an upgrade to its Baseline Credit Assessment and Adjusted BCA from ba1 to baa3. The senior unsecured rating was affirmed.
Books for the new issue were opened on Thursday morning with initial price thoughts of the mid-swaps plus 120bp area for the €500m no-grow six year non-call five green senior preferred issue, expected rating Baa2. After around an hour and a quarter, the leads reported books above €1.5bn, and after around two hours and 40 minutes, the spread was set at 92bp on the back of books above €3bn, pre-reconciliation. The final book was above €2.5bn, with more than 140 investors involved, and the deal tightened some 3bp on the break.
Alpha Bank highlighted that the spread is the lowest achieved on a senior preferred bond by a Greek bank in the duration bracket.
“The successful pricing of the €500m green bond represents a strategic milestone for Alpha Bank, enhancing our funding flexibility to finance green and sustainable investments, while also confirming the confidence of international markets in our credit profile,” said Katerina Marmara, chief of global markets and group treasurer, Alpha Bank.
“The strong oversubscription, the participation of leading institutional investors, and the final pricing at a historically low spread for a bond of this type issued by a Greek bank, are additional factors that reflect the positive assessment of Alpha Bank’s strategy and steady growth trajectory.”
Antonios Tsiantas, FIG syndicate at joint bookrunner and green structuring bank Crédit Agricole CIB, said the transaction enjoyed several tailwinds that contributed to its success.
“This is the first investment grade and hence IG index-eligible bond by Alpha Bank,” he said, “and also their first green bond. Alpha Bank has the smallest outstanding curve in seniors among the Greek banks, so it has been an opportunity for investors to buy a name that is scarcer than its peers.
“Additionally, it is 26% owned by UniCredit and has a close partnership with them, which is seen as a stamp of quality from an international player, something that is again unique to Alpha Bank and further highlights their quality.”
These were among factors that gave the issuer and its leads confidence to proceed on Thursday morning, even if the market’s direction was not completely clear, according to Tsiantas.
“It turned out to be a positive day and it all came together extremely well to produce a fantastic trade,” he said. “The book was phenomenal in both size and quality.”
Asset managers were allocated 74% of the paper and banks 23%, while 84% was placed outside Greece.
“For the Greek banks overall,” added Tsiantas, “we’ve moved to the point where they are now considered pretty vanilla. The investors that had supported Greek banks during the hard, non-IG years now find them in general too tight, but their absence is more than compensated for by new real money buyers of IG paper that we tend to see in every other IG book across Europe.”
Fair value was seen around 90bp, based on Alpha Bank’s curve and extension out to the six non-call five maturity, and on the delta versus recent southern European supply, such as UniCredit and Banco BPM senior non-preferred issuances. The 92bp re-offer spread arrived at after 28bp of tightening from the 120bp area IPTs therefore equated to a new issue premium of 2bp.
“We had a peak book of €3bn and final book north of €2.5bn,” said Mattia Nobile, DCM at Crédit Agricole CIB (pictured below), “which is a modest attrition compared to some other recent trades, so Alpha Bank clearly outperformed. The ESG element helped a lot in this respect, because investors tend to be quite sticky when it’s a green bond, and in particular in this case where it is their first green bond, so a good opportunity for ESG investors to diversify.
“Overall, the trade is a clear vote of confidence from investors in Alpha Bank and the whole Greek bank universe.”
BNP Paribas, Crédit Agricole CIB, HSBC, JP Morgan, Morgan Stanley and UniCredit were joint lead managers.