Morgan Stanley Recognized in IFR Individual Deal Awards
1998 International Financing Review Review of the Year Awards.
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1998 International Financing Review Review of the Year Awards
U.S. Equity Issue: Conoco
In October 1998, Morgan Stanley priced Conocos $4.4Bn initial public offering, the largest-ever U.S. IPO. The deal, which saw heavy interest worldwide, especially in Europe and Asia, included 191 million shares that priced at US$23. IFR offered the following praise for the transaction:
"Conoco would have been a crowning achievement in any market. Coming as it did in October, it was a tremendous feat. U.S. new issuance, particularly IPOs, had fallen to levels not seen since the start of the decade. Money was flowing out of stock funds, with US$3Bn exiting the week before Conoco priced."
Asian Equity-Linked Issue: Fullerton Global Corp/Temasek Holdings
In March, Morgan Stanley joint lead-managed a US$1Bn exchangeable Euroconvertible bond issue from Fullerton Global Corp, a guaranteed subsidiary of Temasek Holdings, the investment arm of the Singapore government. The bonds are exchangeable into Singapore Telecom shares. Morgan Stanley and DBS Bank managed the five-year transaction with a zero coupon and an implied Triple A rating. IFR offered the following commentary on the transactions pricing:
"Despite the hostile environment, Morgan Stanley and DBS Bank managed to produce the largest deal of its type from non-Japan Asia
. By completing the deal on an overnight basis, the issuer was immunized from market risk and eliminated any exposure to Singapore Telecom price risk. Within six hours of launch, the joint lead managers
had generated US$3.32Bn worth of demand without the benefit of a roadshow."
Latin American Bond: Republic of Argentina
IFR notes that the US$1Bn Floating Rate Accrual Note (FRAN) issued by the Republic of Argentina through Morgan Stanley "was widely applauded for its innovation and helped confirm lead manager Morgan Stanleys arrival in the Latin sovereign sector." The note, due 2005, is designed so that its coupon resets periodically based on the Republic of Argentinas US$1Bn due 2006 global. "We were suffering from the first leg of the Asian crisis, and this was an innovative structure that allowed investors who wanted protection from volatility to come in", said Miguel Kiguel, Argentinas Under-Secretary of Finance.
The bonds innovative design has subsequently been copied by other banks, leading Morgan Stanleys Francisco Pujol to remark, "[The deal] created a new asset class that has since been copied by other borrowers."
Americas Securitization: Petroleos de Venezuela SA
In May 1998, Morgan Stanley acted as bookrunner on a US$1.8Bn five-tranche Yankee bond for Petroleos de Venezuela SA (PDVSA). According to IFR, "the deal was simultaneously the biggest Latin American corporate bond issued in 1998, the largest securitization from the region and the first time that a Latin American borrower had been able to pierce its sovereign credit ratings ceiling by six notches."
The transaction raised capital at investment-grade levels for PDVSA, the worlds second-largest petroleum company. Launched and sold in one day, the deal was so successful, stated IFR, "that Petroleos Mexicanos launched a virtually identical transaction in early December" on which Morgan Stanley again acted as structurer and bookrunner.
Italian Lira Bond: European Investment Bank
In March, European Investment Bank (EIB) approached the Italian lire market with a L3TRN 5% bond due April 15, 2008. Morgan Stanley and Banca Commercial Italiana (BCI) acted as bookrunner on the deal, the biggest bond in the history of the Eurolira market. EIB hired Morgan Stanley and BCI to meet its goal of ensuring that the lira deal remained liquid until it becomes fungible into a E5Bn bond on April 15, 1999. To do so, syndicate banks were asked to "act as market-makers according to EIBs specific needs" and the bonds were listed through the MTS, Italys efficient electronic trading system. IFR named the transaction its Italian Lira Bond of the Year "for daring innovation, and ultimate success in its objectives."
Floating Rate Note: Banca Popolare di Brescia
In May, Morgan Stanley launched a US$500MM five-year floating rate note (FRN) for Banca Popolare di Brescia (BIPOP). This was BIPOPs inaugural Eurobond offering. In light of the pending introduction of the euro, BIPOP sought to broaden its investor base by executing this transaction denominated outside its domestic currency.
In an effort that met BIPOPs demands and, according to IFR, "[set] the standard for future issuance," Morgan Stanley held roadshows across Europe to introduce BIPOP, a regional Italian bank headquartered in Brescia, to investors. In the end, according to IFR, "the most pleasing aspect of the issue for BIPOP was the strength of the placement outside Italy, fulfilling the overall aim of the deal. Over half the issue was placed in the UK (28.5%) and Germany (24.1%), and another quarter of the deal was placed domestically."
Euro-MTN Programme: Republic of Italy
The Republic of Italys US$8Bn Euro-MTN facility, arranged by Morgan Stanley, was, according to IFR, "viewed by market professionals as the final piece in the jigsaw of Italys debt management renaissance.... The Euro-MTN strategy was seen as the most dynamic, offering the Italian Treasury greater flexibility, transparency and liquidity."
The Euro-MTN programme was utilised in the second half of 1998, with nine public Eurobond issues launched under the programme, raising close to US$4Bn. Amongst the highlights of the programme were Italys first pure long-dated sovereign issuance in sterling since 1989; the countrys successful return to the Swiss franc market with its second Sfr 1Bn jumbo; the opportunity for Italy to tap emerging currencies for the first time by way of a Euro-drachma issue during the summer; and Italys first five-year Eurodollar benchmark deal since 1996.
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