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United Utilities New Issue: FV Analysis at MS+95a

UTILITIES
  • IPT: United Utilities Exp. EU500m 10.25Y Sust. MS+140 Area.
  • UU has no EUR benchmark outstanding.
  • Eyeballing the GBP market, we note that UU (A3/BBB+) trades slightly inside SSELN (Baa1/BBB+), ~5bp around the 10-15 year area.
  • Looking then for EUR comps, we note that VGASDE trades ~5bp wide to SSELN, but has longer maturities outstanding (SSELN out to 7.5Y) and a sensible looking curve shape.
  • VGASDE 0.5 09/34 is quoted at Z+105 bid, but with a ~72 cash price. We conclude that FV for this issue is around MS+95, 10bp inside. We would apply a wide confidence interval to that given this is an imperfect exercise.

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