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By Laura Benitez
LONDON, Feb 2 (IFR) - UK budget airline EasyJet hasattracted more than 5bn of demand for a 500m seven-year debutbond in a test of appetite for corporate supply after a nearthree-week issuance hiatus.
Leads Bank of America Merrill Lynch, Barclays and SocieteGenerale set initial price thoughts at 165bp to 170bp overmid-swaps on Tuesday morning, a level deemed generous byinvestors.
Guidance followed at swaps plus 150bp area (plus or minus3bp, will price in the range).
"The IPTs look cheap and I expect the premium to be halved,but it would still be coming with a good pick-up. There are manyreasons why this should generate decent demand," one investorsaid early in the marketing process.
EasyJet was offering an attractive concession to compensatefor the volatile conditions, which have stunted supply from thesector this year. Corporates raised only 5.6bn-equivalent lastmonth, the lowest January supply total in 16 years.
"Ryanair is bid at around 135bp over swaps, so it's about30bp tighter than EasyJet IPTs. I don't think I'll need to payup to get a speedy boarding ticket for this one," anotherinvestor said.
Leads used BBB+/BBB+ rated Ryanair as the main comparable.Its June 2021s were bid on Tradeweb at 127bp over mid-swaps andits March 2023s at plus 136bp. Those bonds started the yeararound swaps plus 102bp and 120bp respectively.
The second investor said feedback from accounts on Mondayfor the final pricing level was in the region of 155bp to 165bpover swaps.
The airline was assigned first-time ratings of Baa1 and BBB+by Moody's and S&P last month. Proceeds from the sale will beput towards purchasing new aircraft instead of using moreexpensive bank lending.
Last week, EasyJet reported a 3.7% fall in revenue per seaton a constant currency basis in the three months to December 31.
It said more than half the decline was attributed to adrop-off in demand for flights to Paris, one of the world'smost-visited cities, after the attacks in November that killed130 people.
However, falling fuel costs are expected help the airline ascrude prices hover near 12-year lows. (Reporting by Laura Benitez, editing by Helene Durand, JulianBaker)
