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.
Capital Markets

Corporates: GE extends euro corporate FRN frontier

Floating rate notes are typically a short-dated bank product traditionally aimed at other banks’ treasuries. Is this the start of a new trend?

General Electric Capital Corp brought a €1 billion 15-year floating rate note via Lehman Brothers and BSCH last month. This unusual transaction is the first broadly distributed euro senior corporate floating rate note with a long-dated tenor and is consistent with the continued theme of strong demand for FRNs in a rising rate environment, particularly from non-traditional FRN investors.

Floaters

“I do not think that too many corporates can access the 15-year euro FRN market, which I believe is open mainly to the higher end of the credit spectrum,” says Lorenzo Frontini, head of European syndicate at Lehman Brothers. GE is the only large corporate frequent issuer that still has a triple-A rating. But according to Frontini, there is definitely a possibility of an increase in corporate floaters versus the traditional fixed rate. “We are in an environment with high volatility and expectations for higher interest rates. Therefore more and more investors will shift to floaters as defensive instruments,” he says.

The deal started out sized at €750 million on May 8, offering a coupon of three-month Euribor plus 25 basis points before being tapped the following day for a further €250 million.

The order book consisted of more than 55 accounts, driven by European banks, money managers and insurance companies.

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