HYBRIDS: Hybrids: Week in Review

4 borrowers came to the Hybrid market in a busy week.

• CPI Property was strong again. The company has launched a tender/exchange on the Oct 25 Calls (and also the SGD$ 5.8%). The new 7.5% NC31 Perps are referred to as Type A securities. They will have an innovative structure whereby the notes can be converted into equity-like units if under stress. Moody’s will assign 100% Equity Credit for the notes while the company is sub-IG at the parent level and 50% if it returns to Investment Grade. Oct25 bonds which are not tendered will remain outstanding after the first call date. The tender offers holders 2pts in cash plus a 2.25% increase in notional value of bonds.
• RWE’s dual tranche came wide of our FVs and duly rallied 50-60c in secondary. The NC5.25 attracted an 11x book and the NC8 a 10x book. RWE is expected to spend around EUR35bn in CapEx until 2030 with leverage rising from 2.0x to the low end of 3-3.5x.
• SSE also came with a dual NC5.25 and NC8. Books were 3.25/3.4x with bonds steady on the break.
• Orange brought EUR750m NC7 with a simultaneous tender on Call25s 26s. The new issue was priced quite aggressively with 2x cover. Bonds fell 1/8 in secondary.