25 June 2018 by lberuti
We kicked off the week with iTraxx Crossover 9bps wider closing at 315bps. President Trump’s trade rhetoric and the reactions it provokes around the globe are weighting on risky assets, and the tone was certainly risk off today. Nevertheless, new issues keep coming, and they keep trading well, but for a reason: companies are offering substantial discounts compared with existing bonds. The latest example was SKGID ( Smurfit Kappa ), the corrugated packaging company. They said this morning that they would raise €500mln via the issue of euro denominated senior notes due in 2026, and bearing a coupon of 2.75% to 3% to finance the acquisition of Reparenco Holding that they previously announced. While the deal was upsized to €600mln, the coupon was eventually set at 2.875%, which repriced existing SKGID’s bonds. Their bond due in 2025 bearing a 2.75% coupon was marked 1.5pts lower, and their 5-year risk premium jumped 17bps to 111bps.