HYBRIDS: Hybrids: Week in Review

Supply was heavy with €4.4bn printing. Prysmian was the top performer. €1bn PerpNC5.25 came in line with what I thought was FV (Sub_Sen 167bps) and rallied 2.125pts in secondary to finish with Sub_Sen 145bps just outside TELEFO/VOD. This looks a little tight, but the company is in a very good spot for the next few years with cable demand expected to be strong. 

• VW reduced their Hybrid stack with €1.9bn of NC5.5 & NC8.5 issuance to partially replace €3.25bn NC25 & NC26. Secondary market was very strong when these deals priced with seniors rallying -9bps over the day. Consequently, the deals were repriced below guidance.
• Air France took advantage of a market that has seen Lufthansa issue and British Airways on Outlook Positive. AFFP came with €500m NC5.25 @5.875% rallied 0.125pts.  Veolia and Abertis also issued.
• OMV caused some confusion with an announcement that it would Call the 6.26% NC25 and issue a new hybrid within 18 months. The NC25 has a “First Call” in December but the documentation clearly allows for a redemption 90 days prior to this date. The company alluded to the earlier optionality in their press release. The market was unaware of this as Bloomberg did not show. Bonds fell around 50c to reflect the risk of early redemption.
• Naturgy is tendering for the 2.374 Call26 as part of a 4-way tender against the new dual tranche seniors.