For the second time in three years, Tryg Forsikring chose VP Securities for a Restricted Tier 1 Capital Notes issuance in Swedish krona.
According to Barbara Plucnar Jensen, CFO at Tryg, the desire to reach Scandinavian investors and use an established process were key factors in the company’s decision to issue via VP.
Tryg wanted to refinance their original issuance from May 2016, which has a call in May of this year. They decided on an accelerated plan that would enable them to take advantage of a strong market and finish the refinancing prior to a Rights Issue, launched on 1 March to finance the acquisition of the Scandinavian part of RSA. Thus, in February 2021, Tryg issued SEK 1bn in Restricted Tier 1 Capital Notes via VP Securities with a listing on the Oslo Stock Exchange (Oslo Børs).
Appealing to Scandinavian investors
As Barbara Plucnar Jensen, CFO at Tryg, explains, the company’s increased presence in Sweden was one of the main drivers behind their decision to issue in Swedish krona. “Issuing in Swedish krona makes a lot of sense for us. As a part of our recent acquisition of Trygg-Hansa, we will have a significant Swedish asset on our balance sheet. A large portion of our capital financing is in Swedish krona, hence we’ve issued in this currency before and have benefitted from being in the Swedish market.”
The combination of capital notes issued in Swedish krona and listed on the Norwegian stock exchange is also one that Tryg has had success with in the past, and suits the company’s Scandinavia based investor pool. “The vast majority, 87%, of our investors in this issuance are Swedish,” Barbara Plucnar Jensen says. “The other 13% are located in Denmark and Norway, so they’re all Scandinavian investors, and they don’t really have a preference in terms of which Scandinavian market we issue in. However, our other bonds are listed on the Oslo stock exchange, and it makes sense for us to centralise everything on the same exchange, where we already know the process and prospectus requirements.”
Barbara Plucnar Jensen also adds that keeping the entire process local was a definite advantage.
It makes sense from our point of view to issue in our local markets. We were interested in a Scandinavian issuance in Swedish krona, and we have a good track record with issuing via VP and listing in Oslo, so this was our clear preference.
Barbara Plucnar Jensen, CFO at Tryg
Investor reach and pricing meet expectations
The all-Scandinavian issuance proved to be a success with investors, as the bond was oversubscribed 2.5 times. “We had a terrific result,” relates Barbara Plucnar Jensen. “There’s no doubt that we benefitted from the increased awareness there is around our other transactions, yet to be able to issue a Restricted Tier 1 note through a Scandinavian CSD in these markets was extremely attractive, and that definitely helped our issuance as well.”
In terms of investor reach, Tryg was able to attract a strong representation of Nordic institutional investors.
We had a really good investor reach. Asset managers account for 80 per cent of our order book, and 15 per cent are pension funds. So, we got a good, solid order book,” says Barbara Plucnar Jensen. Pricing also met the company’s expectations. “We had expected to price between 3Month STIBOR + 250-275bp and we ended with a price of 3Month STIBOR + 240bp, so we were pleased with that outcome as well.
Barbara Plucnar Jensen, CFO at Tryg
The fact that Tryg achieved both the investor reach and price they intended illustrates that their confidence in a Scandinavian approach paid off. “If there had been a huge price difference or if the investor reach had been markedly different, then we could have made the argument to issue elsewhere. But that wasn’t the case,” Barbara Plucnar Jensen states.
Andreas Hammarbro Ligaard, Senior Product Manager at VP, also points out how this issuance makes a strong case for cross-border cooperation. “Tryg’s experience highlights how companies can benefit from handling the entire issuance process, from prospectus development to exchange listing, through Euronext. They can get the same investor reach, competitive pricing and apply the same internal process – whether they’re issuing in Euros or one of the Scandinavian currencies. This is how we can offer the most efficient path to the capital markets, whether your target is Scandinavia or the rest of Europe.”
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