The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Network Rail’s bond sunk by the dollar

There's excess liquidity in the market? Corporate issuance is scarce and companies have the market under their thumb? Network Rail's undersubscribed bond issue last week warned corporates against any such broad assumptions.

UK rail operator Network Rail decided to capitalise on market conditions and the favourable response to its three-tranche, £2.25 billion bond three weeks ago to issue a further $1 billion before the year was out.

But the deal was undersubscribed, leaving lead managers Dresdner Kleinwort Wasserstein, HSBC and UBS with a 50% subscription on day one and 80% at pricing on Wednesday.

The culprit was volatility in the dollar markets, with announcements during the week that Asian banks were considering cutting their reserves of dollars in favour of local currencies and the euro.

The pricing was also aggressive, with the coupon of 15bp through Libor several basis points less than Network Rail's previous, sterling bond. But this was not unusual for recent dollar issues and not an overly ambitious price given recent, record appetite for corporate debt in the US.

The deal seems to demonstrate that any favourable market conditions can be upset by bouts of volatility, particularly in the currency markets.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree