Deals of the year 2003: Making brave moves into new markets
War, epidemics and political uncertainty dominated the financial landscape in 2003, interrupting roadshows, delaying deals and making it difficult to predict market movements. Some issuers pulled their deals. But others found ways to meet new types of investor demand. Volatile equity markets sparked unusual convertibles. Warmer sentiment towards Russia produced a whole range of deals. Hostile takeovers returned. And high-yield bonds and LBOs enjoyed a resurgence. Antony Currie, Julian Evans, Deborah Kimbell, Chris Leahy and Katie Martin report.
Best sovereign bond issue
Deal size: $3 billion
Date: June 2003
Joint bookrunners: Deutsche Bank, Citigroup, Goldman Sachs, Morgan Stanley The UK Treasury last entered the offshore capital markets in 1996. However, last year careful monitoring of the markets showed that there was a window to refinance foreign currency reserves more cheaply in the international markets than through gilts.
The Bank of England sought advice from lead managers with a good record. "There is a relatively small group of banks who really specialize in the sovereign/supranational sector, particularly in US dollars," says Christopher Egerton-Warburton, executive director at Goldman Sachs. "The Bank of England did a lot of preparation internally to find a team that they thought would be complementary. They wanted a group of banks who they felt had the strongest distribution capabilities and would work in a cooperative way."
In June 2003 the $3 billion five-year 144A Eurobond was launched, priced three basis points through US treasuries and 2bp over the UST May 2008. The rarity of the issue meant that the order book grew extremely fast.