ING Groep to Raise 2.5 Billion Euros From Sale of Five-Year Covered Bonds
ING Groep NV, the biggest Dutch financial-services company, is selling 2 billion euros ($2.5 billion) of covered bonds, according to a banker involved in the transaction.
The five-year notes will yield 45 basis points more than then the benchmark swap rate, said the banker, who declined to be identified before the sale is completed. The Amsterdam-based lender raised 1.5 billion euros in March from seven-year covered bonds, which currently yield 53 basis points, ING prices on Bloomberg show.
“ING’s new bond will likely get a good reception, it’s a good name and Dutch covered bonds in general are attractive,” said Jose Sarafana, the Paris-based head of covered-bond strategy at Societe Generale SA.
Sales of covered bonds, which typically get the highest ratings because the notes are backed by mortgages or state- sector loans and a guarantee by the issuer, total 4.1 billion euros this month, Bloomberg data show. Issuance soared to 43.6 billion euros in June when the European Central Bank’s year-long program to buy the debt as a way to spur lending came to an end.
Investors demand yields of 106 basis points over swaps to buy covered bonds, down from this year’s peak of 113 in June, Bank of America Merrill Lynch index data show. A basis point is 0.01 percentage point.
ING is managing the sale with Barclays Capital, BNP Paribas SA and Landesbank Baden-Wuerttemberg, the people said. The lender has about 32.8 billion euros of debt maturing through 2012, Bloomberg data show.
DnB NOR Boligkreditt AS, a unit of Norway’s largest bank, is also selling seven-year covered bonds in euros, a banker involved in the deal said. BNP Paribas, Credit Suisse Group AG, Landesbank Baden-Wuerttemberg and UniCredit SpA are managing the sale for the Oslo-based lender.
To contact the reporters on this story: Sonja Cheung in London at scheung58@bloomberg.net; Caroline Hyde in London chyde3@bloomberg.net
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