August 27, 2013 / 1:57 PM / 4 years ago

UPDATE 1-Finland prepares new five-year bond sale

(Adds fair value, background)

By John Geddie

LONDON, Aug 27 (IFR) - One of the eurozone’s last remaining Triple A rated sovereigns, the Republic of Finland, is preparing to issue a new five-year bond via syndication on Wednesday.

The sale of the new bond is expected to raise around EUR3bn-EUR4bn, said one banker managing the deal.

The bonds are being marketed to investors at mid-swaps minus 15bp, a level which offers a 2bp premium to the sovereign’s existing curve.

Fair value on the new September 2018 bond is approximately mid-swaps minus 17bp, based on an interpolation of Finland’s 3.875% September 2017 and 4.375% July 2019 bonds, according to Reuters data at 1300GMT.

Interest rate swap levels indicate the new bonds will be priced to yield approximately 1.2%.

The bond is expected to go on sale on Wednesday morning, for pricing later in the day via BNP Paribas, Bank of America Merrill Lynch, Danske Bank, Deutsche Bank and JP Morgan.

Finland, a rare name in capital markets, last issued bonds via an auction on June 18, tapping its outstanding 10-year benchmark by EUR1bn, and its longer 30-year bond by EUR500m.

Its last sale of a new bond was back in April, when it sold EUR4bn of a syndicated 1.5% April 2023 issue, after receiving orders over EUR9bn.

Finland’s total borrowing requirement for 2013 is around EUR20bn, of which EUR12bn is set to be issued in government bonds. In the year to date, it has issued EUR6.5bn of euro-denominated bonds via auction and syndication, as well as treasury bills and smaller foreign-currency bonds off its EMTN programme. (Reporting by John Geddie, editing by Anil Mayre)

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