Analysts argue that the final pricing of Macquarie in pricing before the Fed decision was beyond the fair value. A Singapore-based trader analyzed that in order to get things done they must pay for it or repricing. However the deal widened the Macquarie secondaries by around 10bp-20bp.
CreditSights for instance estimated fair values of 112bp in three-year tranches. It is based on a new issue concession of 15bp of the 6.25-year non-call 5.25 tranche at 193bp on a 25bp-30bp NIC. It is an 11.25-year non-call 10.25 tranche at NIC’s 225bp and 20bp. Investors worrying about secondary performance draw demand from borrowers who paid extra concession on new issues.
Somehow, this tactic could force a repricing of an issuer’s yield curve especially in the secondary market. Macquarie issues 2033 fixed-to-floating senior notes 2.871%. Last year in October, this value widened from 12bp to 201bo over Treasuries. It is according to the data from MarketAxess.
A managing director at Amherst Pierpont, Dan Bruzzo said that the latest concession is overly generous. It is too generous that could be disruptive in the secondary market for the past week, especially in bank paper. As Taiwanese investors were topping up, Macquarie notes were raised in the secondary market. The valuation is around 3bp-4bp inside reoffer levels. The other two tranches were around reoffers that spread in narrow ranges.
Fed’s expected raising move on its benchmark 25bp rate follows the tightening of 10bp notes. Everything that is priced at par is the 3.231% three-year tranche, the 4.098% 6.25-year non-call 5.25 fixed-rate tranche, and 4.444% 11.25-year non-call in 10.25 tranche. The settlement was on March 21, they proceeded to target general corporate needs, said IFR Asia. The bankrunners are Bank of America, Citigroup, Goldman Sachs, HSBC, Macquarie and MUFG.
