Bart van Dooren, head of capital markets at Dutch public sector agency Bank Nederlandse Gemeenten (BNG), says that 2002 was a good environment in which to be a AAA issuer. “With the flight to quality it hasn’t been hard to attract investors’ attention and get funding on board. Getting good all-in levels has been a different ball game, though,” he says.
Bankers praise how he has gone about doing this, though. Berman, at UBS Warburg, says: “BNG have done a fantastic job in 2002 – they are extremely transparent with the market, and their 10-year euro benchmark was one of the highlights of the year. Their emphasis in 2003 will probably be on globals and building up their international investor base – I think we’ll see them in dollars a lot this year.”
Like many other issuers, BNG has been devoting increasing attention to marketing its credit in Asia. When Euromoney spoke to him, van Dooren was preparing to travel to Asia again to meet more than 80 investors and update them on developments in the Netherlands and the wider eurozone.
“Asian demand has been more and more important, particularly over the last five months or so,” he says. In our recent $1.5 billion March 06 deal [launched on January 8 2003], 74% of allocations came from Asia. Especially encouraging was the 10-year e1.5 billion deal in September. It was widely placed with Asian central banks, and in the past I’ve normally had the feeling they will only take things up to five years.”
This was the bank’s return to 10-year euros after an absence of more than a year and a half. It was also its first use of the pot system to improve the order book’s transparency. Van Dooren says the treasury team was delighted by the pan-European distribution achieved.
Central banks’ typical desire for dollars has meant that this currency makes up the biggest part of BNG’s funding. But euros are gaining in importance. In 2001, they made up 27% of total funding, and in 2002 the level rose to 31%. Van Dooren needs to issue about e12 billion again in 2003, and says his priority is building yield curves in both currencies – both have gaps at five years, and in euros a 10-year deal is also needed. Highly structured deals will not be possible though: as a publicly owned institution, the bank does not use equity-linked or credit-linked notes.
Like other issuers Euromoney spoke to, van Dooren no longer feels his funding programme is under much threat from bigger borrowers. Although his benchmark deal size has grown from e1 billion to e1.5 billion, he has no interest in trying to compete on size alone. BNG’s comparative rarity value ensures good demand. “A year ago, maybe we were feeling some pressure from such issuers as KfW – certainly we can’t build up that sort of size and liquidity. But now that’s not the case. Liquidity’s not just about size. Market-making banks are becoming more important. Deals of e1 billion to e1.5 billion can tighten more easily in the secondary market, and the trend seems to be that institutional investors are looking on these smaller benchmarks more favourably.”
