Continental Upsizes Well-bid Bond

Peru’s BBVA Continental emerged Thursday with a $500m bond, the region’s first cross-border FIG deal in close to a month. Tapping demand ahead of the anticipated September rush, the bank upsized the sale from $500m, after getting $7bn in orders. The BBB/BBB+ Peruvian priced the 2022 at par with a 5.00% coupon, to yield at the tight end of 5.125%-area guidance, brought in from wider 5.5% whispers. The bond was trading up 1 point in the grey Thursday afternoon, according to traders. Leads saw a pre-announcement UST+338bp interpolated spread on Continental’s 2020 bonds, indicating a negative concession of as much as 8bp versus an interpolated spread of 330bp for the new 2022. Investors noted a minimum negative concession or no concession. “It priced tight to its own curve, but where else are you going to buy Peru right now?” asks an EM investor following the sale. “They had the right strategy of pricing ahead of supply in the market with good results,” says a banker away from the deal. The largest order book ever seen by the bank was boosted by managers leaving it open overnight Wednesday, resulting in greater participation from Asian accounts, which reached about 25%. US participation was roughly 30%, with about 20% from Europe and the remainder from other regions. Investor interest was robust versus Continental’s January 2012 $500m transaction, which saw only $1.8bn demand amid worries about Continental’s ties to its Spanish parent. “BBVA trades wider to other Peruvian banks because of the Spanish name, but people are starting to see through that. Given timing of the year, where cash levels are and the popularity of Peruvian trades, the deal got done,” adds another EM investor. BBVA, Bank of America Merrill Lynch and Goldman Sachs managed the sale.