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Santander Issues: 5Y FV At MS+95-100bp And 10Y At MS+130bp

FINANCIALS

Santander two-tranche senior non-preferred issue: we see fair value for the 5Y at MS+95-100bp and FV for the 10Y at MS+130bp area (see graphic).


  • Santander is issuing a 5Y SNP with IPT at MS+130bp area and 10Y with IPT at MS+160bp area, rated Baa1/A-/A-.
  • The most populated curves in SNP banking at similar ratings are CredAg and Rabobank which are marginally better-rated (both A3/A-/A+). BBVA is a notch weaker rated and only a small SNP curve.
  • The ACAFP 4.25 ’29 sits at MS+84bp and, for nearly an extra year and a rating notch, we’d look for at least a 10bp premium so see the SANTAN issue at MS+95-100bp, which also puts it tight to the line between the SANTAN issues either side (labelled).
  • For the 10Y, we note the curves flatten substantially for both ACAFP and RABOBK so don’t see a huge term premium over the SANTAN 4.875% ’31, so can see the fair value as tight as MS+130bp.

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