Friday, January 11, 2019

Danske's $3 Billion Bond Offering Hinges on Browder Conference

International Financing Review, Jan. 10:
Danske Bank could revive a US$3bn dual-tranche bond it postponed on Wednesday depending on the outcome of a press conference to be held later on Thursday by Bill Browder, according to the bank’s head of treasury.

Browder, co-founder of Hermitage Capital Management, and a driving force behind criminal money-laundering complaints against banks, was quoted in a Bloomberg article that he had more to reveal on Danske Bank, which is under fire for alleged money laundering.

The planned senior non-preferred transaction had amassed an order book in excess of US$13bn according to one investor and would have been the Danish lender’s first unsecured deal since last year’s revelations.

“You are probably aware that Mr Browder yesterday afternoon announced that he will host a press conference today relating to his investigation into money laundering at Nordic Banks,” said Christoffer Mollenbach, head of treasury of Danske Bank told IFR.

“Given the focus around money laundering, we thought it would be right to postpone the pricing of the transaction until we have clarity on what he is going to say. We don’t know if it’s anything material or not.”

Mollenbach said investor feedback was that postponement was the responsible approach and that it was too early to say whether a revived trade would have to price wider.
The ability to revive the trade quickly is crucial given that the bank goes into blackout soon.
“We provided a trading update just prior to Christmas and we are therefore comfortable pricing a deal to and including Monday,” said Mollenbach.

Danske had launched a US$1.5bn three-year at Treasuries plus 255bp and a US$1.5bn five-year at plus 285bp, tightening pricing by 25bp after beginning the marketing process with generous new issue concessions.
“We had a book oversubscribed multiple times and nobody dropped when we tightened guidance,” he said. “If you look at price indications versus our Nordic peers, we are compensating investors quite a lot already because of the ongoing investigations.”

The transaction followed some intense marketing work carried out by the bank in the fourth quarter of 2018 and during a two-day roadshow when the bank spoke to over 100 investors.

It is the second time in less than a year that Danske has had to put a transaction on hold.
It was forced to delay an inaugural euro senior non- preferred bond last May after it emerged that the Danish financial watchdog had found some “serious weaknesses” in the bank’s governance as part of an anti-money laundering probe into the bank’s Estonian branch nL8N1SB32G.