Chicago, Oct. 20 – The European Union priced a €17 billion dual-tranche social bond (AAA/AA/AAA, according to a market source and a press release.
The first part, €10 billion of 0% 10-year notes priced at 102.396, or a spread of 36.7 basis points over the 0% Bund due Aug. 15, 2030. Order books, which closed at 4 a.m. ET, were for €145 billion.
Talk was for a spread of mid-swaps plus 3 bps. The tranche priced in line with spread talk, at 3 bps over mid-swaps. Initial talk was for a spread in the mid-swaps plus 6 bps area.
Also massively oversubscribed, the second €7 billion tranche priced with a 0.1% coupon and a 20-year tenor at 99.39, or a spread of 52.1 bps over the 4.75% Bund due July 4, 2040. Orders were for €88 billion.
Talk was for a spread of mid-swaps plus 14 bps. This tranche also came in line with talk, with a final spread set at 14 bps over mid-swaps. Initial talk had the tranche coming with a spread of mid-swaps plus 17 bps.
The issue is the largest social transaction every printed. Over 500 investors participated on each tranche.
The Regulation S notes are backed by the European Union member states and the EU budget.
The issue is the European Union’s first social bond, its first dual-part transaction and had a record orderbook. It also represents the most money every borrowed by the EU.
Proceeds will be used for the SURE program, or Support to mitigate Unemployment Risk in an Emergency.
Joint lead managers were Barclays, BNP Paribas, Deutsche Bank (billing and delivery), Nomura and UniCredit.
The notes will be listed on the Luxembourg Stock Exchange.
| Issuer: | European Union
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| Issue: | Social bond
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| Amount: | €17 billion
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| Bookrunners: | Barclays, BNP Paribas, Deutsche Bank (billing and delivery), Nomura and UniCredit
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| Pricing date: | Oct. 20
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| Settlement date: | Oct. 27
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| Ratings: | Moody’s: Aaa
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| S&P: AA
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| Fitch: AAA
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| Distribution: | Regulation S
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| Marketing: | Investor calls
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| 10-year notes
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| Maturity: | Oct. 4, 2030
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| Coupon: | 0%
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| Price: | 102.396
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| Yield: | Negative 0.238
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| Spread: | Mid-swaps plus 3 bps, or Bund plus 36.7 bps
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| Price talk: | Initial talk mid-swaps plus 6 bps, final talk mid-swaps plus 3 bps
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| 20-year notes
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| Maturity: | Oct. 4, 2030
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| Coupon: | 0.1%
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| Price: | 99.39
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| Yield: | 0.131%
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| Spread: | Mid-swaps plus 14 bps, or Bund plus 52.1 bps
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| Price talk: | Initial talk mid-swaps plus 17 bps, final talk mid-swaps plus 14 bps
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