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CREDIT SUPPLY: NDAFH AT1 Issue; We See FV Around 6.6% Yield Area

CREDIT SUPPLY
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Nordea (NDAFH: A3 pos/A/AA-) issuing USD AT1. We see fair value around 6.6% yield area.

  • NDAFH is issuing USD benchmark PerpNC7.5 AT1 with IPT at 7.125% area. Expected ratings are BBB/BBB+.
  • Using a swap rate of 3.21%, this equates to MS+392bp. NDA only has two meaningful USD AT1s out and the adjacent (NDAFH 3.75 Perp) is a low price/coupon private placement. SHBASS is similarly rated but its adjacent (SHBASS 4.75% Perp) is also a low-price issue. HSBC’s curve is older issues at this workout, too. SWEDA has a good comparator (SWEDA 7.75% Perp) not far away, one notch weaker so we feel fair value is likely around MS+340bp but with a wide confidence interval. This equates to 6.6% yield area.
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Nordea (NDAFH: A3 pos/A/AA-) issuing USD AT1. We see fair value around 6.6% yield area.

  • NDAFH is issuing USD benchmark PerpNC7.5 AT1 with IPT at 7.125% area. Expected ratings are BBB/BBB+.
  • Using a swap rate of 3.21%, this equates to MS+392bp. NDA only has two meaningful USD AT1s out and the adjacent (NDAFH 3.75 Perp) is a low price/coupon private placement. SHBASS is similarly rated but its adjacent (SHBASS 4.75% Perp) is also a low-price issue. HSBC’s curve is older issues at this workout, too. SWEDA has a good comparator (SWEDA 7.75% Perp) not far away, one notch weaker so we feel fair value is likely around MS+340bp but with a wide confidence interval. This equates to 6.6% yield area.