Deutsche Bank dashes back to bond market

Tue Oct 11, 2016 7:35pm EDT
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By Shankar Ramakrishnan and Natalie Harrison

NEW YORK (IFR) - Deutsche Bank made a rapid-fire return to the US high-grade bond market on Tuesday, satisfying investor demand by tapping last week's $3 billion deal for another $1.5 billion in fresh cash.

Investors who bought into Friday's deal were clamoring for more, leading the bank to sell new debt for the second straight session - and show it still has significant access to funding.

Deutsche's bond spreads have been under pressure since September, when the US Department of Justice asked the bank to pay $14 billion to settle an investigation into its selling of mortgage-bond securities.

But after raising $4.5 billion over two days, both times from reverse inquiry, the bank instilled some confidence that it is making progress in putting some problems behind it.

"If they are able to take $4.5 billion out, this shows there is clearly demand for the name if there is adequate compensation," one syndicate banker told IFR.

Deutsche paid a new issue concession of around 50bp on Friday's deal, which was a chunky premium compared to its outstanding bonds.

But it was broadly in line with where its paper was trading after the sell-off occasioned by the DoJ request.

Tuesday's self-led tap of its 4.25 percent October 2021s priced at 100.263 and a spread of 290bp over Treasuries for a yield of 4.191 percent, offering investors a premium of around 25bp.   Continued...

A statue is pictured next to the logo of Germany's Deutsche Bank in Frankfurt, Germany September 30, 2016. REUTERS/Kai Pfaffenbach/File Photo