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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Jefferies is issuing a two-tranche senior unsecured, both in benchmark size, with 2Y IPT at MS+100bp area and 5Y IPT at MS+155bp area. We see 2Y fair value at MS+85bp and 5Y FV at MS+135bp.
- The first graphic shows the USD senior unsecured curves for JEF and some peers, to give a context of where it trades in local terms – we see it between Barclays (Baa1-rated) and Citigroup (Baa2-rated) but Barclays (non-ringfenced entity) is the wider of the pair. Our inference is that this reflects the overseas nature of Barclays (from a USD perspective).
- JEF only has a single EUR senior unsecured (JEF 1% 07/19/24) which is obviously very tight reflecting its imminent maturity. The second graphic shows the EUR senior unsecured curves for Barclays and Citi with the latter, again, the tighter but here it’s A1-rated (vs. BACR’s Baa1). JEF is coming to market at Baa2 (similar to its US-rating) so it should trade wide of BACR, especially with the geographic bias we observe in the USD market.
- We see fair value for the 2Y at MS+85bp, noting the adjacent Barclays bond (BACR 0.877% is low coupon/low price). For the 5Y, we see FV at MS+135bp, to maintain a margin above the BACR 4.918% streaming at MS+126bp, reflecting the ratings gap.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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