Massive Demand for Austrian Railway Bonds

Erste Group, mandated as joint bookrunner, issued a € 1.0bn fixed rate 20-year bond for OeBB-Infrastruktur AG, the sole owner, constructor and operator of virtually the entire Austrian rail network. The issue was priced at a spread of mid-swaps +95 bps, maturing in May 2032 with a fixed annual coupon of 3.375%. The company is indirectly owned by the Republic of Austria and benefits from an explicit, unconditional and irrevocable guarantee from the Republic of Austria (AA+ negative / Aaa negative/ AAA stable).

Due to strong investors’ interest, the issue was 3.0x over-subscribed within just 30 minutes, with the orderbook being dominated by insurance companies/pension funds (73%), fund managers (19%), and banks (8%). More than 100 high-quality investors supported the transaction, with major interest coming out of Germany (66%), Asia (14%), Austria (6%) and France (5%).

„The successful issuance of OeBB-Infrastruktur’s EUR benchmark bond clearly demonstrates investors’ confidence in the company’s performance, supported by its predictable revenue streams and the debt guarantee by the Republic of Austria,” comments Franz Hochstrasser, Deputy CEO of Erste Group. „The issue was also boosted by the recently successful auction of Austrian government bonds, as well as the fact that investments in infrastructure development are a key-priority for Austria’s economy,” added Franz Hochstrasser. Erste Group ranks 1st as bookrunner for corporate and sovereign bonds in Austria and CEE, with a market share of 11.7% and a volume of € 4,288m in 2011.