UPDATE: SAP Two-Part Bond Capitalizes On Improved Sentiment

29th Jul 2010 14:57

(Adds comment, background) By Art Patnaude Of DOW JONES NEWSWIRES LONDON (Dow Jones)--German business software provider SAP AG (SAP) is set to price a two-part bond Thursday, capitalizing on improved market sentiment to bring the first investment-grade corporate deal in the euro market since July 9. The company recently arranged a EUR2.75 billion loan that backed its $5.8 billion acquisition of software company Sybase Inc. The three-year, EUR600 million bond will price at 60 basis points over midswaps, while the 18-month, EUR500 million tranche is going to price at 50 basis points over midswaps. Order books for the three-year deal were around EUR3.5 billion, and near EUR850 million for the 18-month bond. "We took advantage of that (positive) market and announced the transaction Wednesday," said Wayne Hiley, Head of European Corporate Syndicate at Barclays Capital, adding that interest has been solid. "We knew we were doing a three-year (tranche) but also said maybe would do an 18-month, which could be fixed, could be floating," he said. "After feedback, we decided to focus on the 18-month fixed and three-year fixed...There was plenty of interest so we upsized both (tranches) a bit and they are pricing at the tight end (of initial guidance)." The cash tender for all outstanding shares of common stock of Sybase was completed Tuesday, a company statement said. Barclays Capital PLC and Deutsche Bank AG are joint bookrunners on the new bonds, which are expected to price later Thursday. The issuer is unrated. However, as the summer lull that traditionally comes in August approaches, the SAP bond doesn't necessarily mean there will be a major influx of new deals. "The market is in decent shape, but most corporate issuers are looking at September," Hiley said. -By Art Patnaude, Dow Jones Newswires; +44 (0) 207 842 9259; [email protected] (Carol Dean in London contributed to this report) (END) Dow Jones Newswires July 29, 2010 09:57 ET (13:57 GMT)