Data and analytics company LSEG printed the biggest investment-grade corporate transaction in the sterling market since January 2023 in its return to the currency after an absence of more than four years.

The £900m dual-tranche deal marked the company's first in its home currency since March 2021. The combination of a rare, but blue-chip issuer, in a market in which supply has been patchy and mostly from utilities, helped rouse investors to put in more than £4.5bn of orders at peak. Even after some orders dropped out the final books stood at about £4bn. 

"It’s a very rare name in the sterling market … but if you go back and have a think about outstanding bonds, the demand for a name of this quality out of the UK has been substantial," said a banker close to the deal.

LSEG (A3/A) also offers value for its ratings. "It trades quite cheap for a non-cyclical Single A name and works well as a cash-park name," said a second banker close to the deal.

The company, the parent of IFR, has been on a global issuance spree over the past 12 months, active in euros, US dollars, Swiss francs and yen. Sterling was the missing piece, but given it is a sterling funder it made sense to issue in the currency. "They could have done a tranche in euros but they were pretty focused on sterling," said a third banker close to the deal.

The company undertook calls with investors on Friday, but decided to wait until Tuesday because of a public holiday in Japan on Monday.

"There are large Japanese investors who have a relationship with the company and are regular supporters across currencies," said a fourth banker close to the deal in explaining why the Japanese holiday mattered. The leads were, therefore, keen to "take into consideration investors who had previously supported the credit".

Books opened on an October 2028 note at 90bp over Gilts and a September 2032 tranche at plus 95bp.

The scale of demand meant the leads could crunch pricing to guidance of 70bp area (plus or minus 5bp) and 75bp area (plus or minus 5bp) for a total deal size of £800m–£900m.

A £400m long three-year note then priced at 65bp and a £500m seven-year tranche at 70bp. 

The combined size was the biggest by an investment-grade corporate since Electricite de France raised £950m through two tranches as part of a dual-currency deal in early 2023 – though Southern Water did raise more than LSEG through a single tranche earlier this year when it issued a £750m seven-year bond at the end of July.

"It’s been a long while since we’ve seen a transaction with this type of book with those tight spreads," said the first banker. "Those are generally reserved for only the best-in-class names. I think the fact that you’ve got spreads of 65bp and 70bp, respectively, for both tranches and then still get a £4.5bn [peak] book is pretty remarkable; it is a testament I think to the quality of the issuer.”

Bankers said there was no straightforward way to derive fair value given the lack of recent sterling bonds by LSEG. They said there were various methods that could be used, including considering LSEG's euro and dollar bonds.

"It's come inside where feedback was on fair value," said the fourth banker. "So, if anything, it's a negative new issue premium."

Proceeds will be used to pay down upcoming maturities, commercial paper and also for general corporate purposes.

Barclays, Citigroup, Lloyds Bank Corporate Markets, Standard Chartered and TD Securities were the bookrunners.

The issuing entity was LSEGA Financing.

Source: IFR