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Commerzbank EUR T2 Issue: We See Fair Value Around MS+215-220bp

FINANCIALS

Commerzbank is issued EUR Tier 2 today with IPT at MS+260bp area, we see fair value around MS+215-220bp.


  • Commerzbank (CMZB) is issuing benchmark EUR Tier 2 (10.5NC5.5) with IPT at MS+260bp and books already indicated above EUR1.6bn (ex-JLMs), rated Baa3.
  • CMZB has a couple of good datapoints close by and we note only a 6bp uplift for a year’s extra duration between the 6.5% and 6.75% points, which could entice us towards MS+215bp for a fair value.
  • However, the ISPIM 6.184% at MS+206bp (similarly-rated) indicates its contemporary curve should be much higher (there are plenty of low coupon & low price points dragging it down). Similarly, the BPM 5% at MS+240bp (one notch weaker-rated) does mean there’s an alternative with some optionality around takeover premium (BPM is seen as a target in Italy) at quite a big wide to this CMZB issue.


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