BoI and MunHyp face the green firsts
LONDON, March 3 (IFR) – Bank of Ireland Group obtained on Wednesday a first issue of green bonds with a senior holding of 750 million euros subscribed three times while Muenchener Hypothekenbank has found more limited interest in its tighter € 500million of non-preferred green seniors, while also expanding its audience.
The two competing loss-absorbing senior bonds highlighted the contrast between demand from issuers in the tight segment of the market and those able to pay slightly higher spreads and yields, in a context of historically tight valuations.
Bank of Ireland heads BNP Paribas, HSBC, JP Morgan, NatWest Markets and Societe Generale have opened books for the five-year six-year no-call transaction with initial thoughts on average swap prices plus a 100bp area.
The spread was then set at 77bp and the size at 750 million euros, with an accounting close above 2.25 billion euros.
“It was a blowout, a really well executed deal,” said a banker away from the slopes.
“The final landing left virtually no new issue grants, if anything. It’s a rare credit, well-liked and well-followed. It was always going to go well.”
Bankers pointed to the size of the pound as a particularly impressive result, suggesting that the Irish issuer may have benefited from a halo effect from a recent improvement in UK risk sentiment.
“It is a credit with an ascending trajectory, with a good  results, a good green frame – it does the trick, “said a banker of one of the officials.
Bankers saw the fair value of the new issue in the mid-1970s, extrapolating from the Bank of Ireland’s 2024 1% senior non-preferred bonds from November 2025, which were offered at 68 bps.
The deal – expected to be rated Baa2 / BBB- / BBB (Moody’s / S & P / Fitch) – is the first in the Bank of Ireland’s green bond framework, that he unveiled last year.
The proceeds of this framework will be used to finance loans related to green buildings and energy efficiency, renewable energies and clean transport.
AIB Group sold Ireland’s first green bank bond last September, printing a € 1 billion Tier 2 that raised financing for loans to green buildings and renewable energy projects.
Meanwhile, MunHyp was in the market with € 500m (no growth) over eight years, which was not only its first green SNP, but also its first SNP format benchmark.
Bookkeepers BayernLB, Crédit Agricole, DZ Bank, NatWest Markets and UniCredit marketed the € 500m (no growth) eight-year deal with mid-swap IPTs plus an area of 75bp.
The operation was finally launched at 57bp, with accounting closings above 800 million euros (pre-registration).
Bankers said demand for the transaction was limited by the tight supply spread, also noting that MunHyp does not enjoy the same international tracking as some more regular issuers. Competition with Bank of Ireland’s broader offering may also have diverted investors’ attention from the deal, the bankers suggested.
“It’s not disrespecting MunHyp or the credit, it’s just where the spreads are,” the second banker said. “The market is okay with paying higher spreads, in general.”
A banker from one of the leaders said that MunHyp had nonetheless achieved its goal of reaching a wider range of investors than the one who participated in its senior benchmark sub-index issue.
The result was in line with recent tight-priced senior green issues from De Volksbank and SpareBank 1 Ostlandet, which also drew around € 800m in orders last week with final spreads of 65bp and 42bp, respectively.
Bankers said the more modest demand reflected the tight levels and each of the banks was a relatively infrequent issuer in the senior euro market.
“As we get closer to tightening, the investment community is much more sensitive to the scope of performance here, especially if we’re not going to have a lot of rally on the rate side and they have to go. press the performance of spreads for their spread returns, ”said a fourth banker.
“Being more disciplined about where they buy securities is clearly the key and the goal for them. There is a line between some of the more frequent and liquid issuers, and perhaps others less frequent, and the concessions they make. paying. “
MunHyp was deemed to have paid a concession of around 2bp.
As MunHyp has no benchmark senior debt outstanding in euros, bankers instead pointed to comparables such as BayernLB’s green 0.125% in February 2028, offered at 45bp, and social 0.375% in February 2027 of LBBW and 0.375% in September 2027, both offered at 49bp, according to Tradeweb.
Proceeds from MunHyp’s green bonds will be used for loans through its green mortgage program or certified environmental loans for commercial mortgages.
The transaction is expected to be rated A2 by Moody’s.
(Reporting by Tom Revell; editing by Sudip Roy, Robert Hogg)
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