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CREDIT SUPPLY: ALPHA AT1 Issue: We See FV Tight End Of 7.4-7.6% Range

CREDIT SUPPLY
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Alpha Services (ALPHA: Ba2 pos/B+ pos/BB- pos) is issuing AT1 today, we see fair value around 7.4-7.6% yield area and do note some very tight recent pricing of AT1s so would err towards the tighter end of that range.

  • ALPHA is issuing an expected EUR300m PerpNC6 AT1 with IPT at 8% area. Expected rating is B2.
  • Using a 6yr swap rate of 3.41%, this equates to MS+460bp area. Banco BPM is slightly better rated, so BAMIIM 7.25% at slightly longer workout appears a fair value floor. The CABKSM and ISPIM bonds at shorter workouts are both older, low coupon/price issues, so less relevant. Looking for a c.20bp uplift for the rating difference, with a discount for the shorter workout, against the BAMIIM bond, we can see a fair value around MS+400-420bp area. This equates back to a yield of 7.4-7.6% area.
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Alpha Services (ALPHA: Ba2 pos/B+ pos/BB- pos) is issuing AT1 today, we see fair value around 7.4-7.6% yield area and do note some very tight recent pricing of AT1s so would err towards the tighter end of that range.

  • ALPHA is issuing an expected EUR300m PerpNC6 AT1 with IPT at 8% area. Expected rating is B2.
  • Using a 6yr swap rate of 3.41%, this equates to MS+460bp area. Banco BPM is slightly better rated, so BAMIIM 7.25% at slightly longer workout appears a fair value floor. The CABKSM and ISPIM bonds at shorter workouts are both older, low coupon/price issues, so less relevant. Looking for a c.20bp uplift for the rating difference, with a discount for the shorter workout, against the BAMIIM bond, we can see a fair value around MS+400-420bp area. This equates back to a yield of 7.4-7.6% area.