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Strong demand for MuniFin’s new 3-year USD benchmark

Decorative picture featuring a detail of the US one dollar bill.

The transaction was announced on Tuesday 26th June 2018 with initial price thoughts (“IPTs”) of mid-swaps+5bps area, representing an approximate 2bp new issue premium to fair value. The investor response throughout the European afternoon was strong, with indications of interest exceeding $1.3bn. Books were officially opened in the morning of 27th of June with price guidance revised to mid-swaps+4bps area. The spread was set at mid-swaps +3bps; representing the tightest spread to mid-swaps for MuniFin in this maturity since 2014. The final orderbook was in excess of $1.65bn.

“We are extremely happy with the transaction. The timing was successful and strong book building process enabled us to achieve a desirable funding level. We’ve been constantly building our USD investor base since 2011 and it’s nice to see that the Finnish local government sector still acts as safe haven during volatile market conditions”, says Antti Kontio, Head of Funding and Corporate Responsibility at MuniFin.

There was notable demand from Central Banks and Official Institutions (52%), as well as Bank Treasuries (42%). The participation from Americas-based investors the largest-ever in MuniFin’s USD benchmark, accounting for 66% of the final allocation followed by Europe, Middle East and Africa with 23% share. Asia Pacific accounted for 11% of the transaction.

MuniFin has funding requirements of EUR 7.0 billion for 2018 and after this transaction approximately EUR 4.8 billion has been completed.

Details of the transaction:

Issuer:   Municipality Finance Plc (“MuniFin”)
Rating:   Aa1/AA+ (both stable)
Issue Size:   USD 1.0 billion
Settlement Date:  5th July 2018
Maturity Date:   8th June 2021
Coupon:  2 .75% payable semi-annually
Re-offer Price:  99.700%
Re-offer Yield:  2.858%
Re-offer Vs Benchmark:  T 2.625% 06/15/21+25.8bps
Re-offer Vs Mid-swaps:  +3bps
Lead Managers:   BofA Merrill Lynch, BNP Paribas, RBC Capital Markets, TD Securities

More information:

Joakim Holmström, Head of Capital Markets, +358 9 6803 5674
Antti Kontio, Head of Funding and Corporate Responsibility, +358 9 6803 5634