April 10, 2024 08:27 GMT
BNS Green 5Y Sr Unsec: IPT at MS+105bp Area, We See Fair Value MS+85bp Area
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Bank of Nova Scotia Green 5Y EUR benchmark senior unsecured issue; IPT is MS+105bp area, we see fair value around MS+85bp area (BNS CN).
- BNS’s existing EUR curve (A2-rated) is all old issues with low coupons/cash prices so is a poor comparator and, in fact, shows well inside (better rated) RBC and TD Bank (both at A1).
- The first graphic shows BNS’s USD senior unsecured curve looking much more logical and trading slightly wide of the two better-rated peers.
- Looking back to the EUR curves (second graphic), we struggle to see this having fair value inside MS+85bp, due to the two (better-rated) bonds from RY and TD (RY 4.375% and TD 3.563%, at slightly longer maturities). We assume the syndicate is looking for a greenium to move this inside those better-rated comparators but we feel this might be a little aggressive.
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