June 06, 2024 10:34 GMT
PHNX RT1 Issue: We See FV At 8.2% Area, Wide Confidence Interval
CREDIT SUPPLY
Phoenix ((PHNXLN: BBB+) is issuing USD RT1 – we see fair value around 8.2% area with a very wide confidence interval – USD RT1s are rare and PHNX is a first-time issuer in this market, we believe.
- Phoenix is issuing USD500m (WNG) PerpNC6 RT1 debt today with IPT at 8.5% area. Books are already >EUR1bn (incl. JLMs). Expected rating is BBB+.
- Using a USD swap rate of 4.01% this gives a spread of MS+449bp. There are very few USD RT1s out there but the (unusual-shaped curve) would imply a fair value around MS+420bp.
- Looking at the EUR RT1 market, MS+420bp puts it slightly wide of AGSBB 3.875% (at around MS+400bp) but this is a very low cash price bond, so would, normally, trade wider). If anything, MS+420bp may be aggressive, especially for a first time USD RT1 issuer and a relatively small insurer. Another with a very wide confidence interval, in our view.
- MS+420bp equates back to 8.2% area.
Keep reading...Show less
159 words