Financial Sector Bond-ING

By Steven Levine

Dutch bank ING Groep (NYSE: ING) surfaced Tuesday with a new senior unsecured note sale in two-parts, amid further weakness in the Netherlands’ business conditions.

ING took advantage of still ultra-low U.S. interest rates and good demand in the U.S. bond market to sell high-quality financial sector debt.

The yield on the 10-year U.S. Treasury note was last quoted bid at around 2.487%, with the three-month bill moving further into positive territory on the yield curve at 2.428%.

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The bank also entered the U.S. dollar-denominated primary market after recently posting a better-than-expected fourth quarter of 2018 earnings and following ING Bank’s credit rating upgrade.

The Amsterdam-headquartered financial services firm said it generated a little more than €1.69bn in Q4 2018, a 4.5% rise over the prior year, increased its lending by €3.2bn, as well as grew its customer base despite a money laundering-related scandal.

In early September 2018, ING noted that it agreed to settle a corrupt practice case with the Dutch Public Prosecution Service (DPPS), centered on its anti-money laundering program, for €675m in fines and €100m for disgorgement. 

ING Group CEO Ralph Hamers said that following the settlement, the bank continues to implement its know your customer (KYC) enhancement program, emphasizing regulatory compliance as the key priority. He added that the organization “continues to work hard on enhancing our customer due diligence files and on a number of structural solutions to bring our anti-money laundering activities to a sustainably better level.”

Meanwhile, ING’s global customer base grew by one million over the year to reach 38.4 million, and the number of primary customers increased 9.9% to 12.5 million. 

ING Group’s latest two-part debt issuance, comprised of tranches due in 2024 and 2029, were recently quoted priced at spreads in the areas of 150bps and 180bps more than comparable U.S. Treasuries, respectively, according to Bloomberg.

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The author does not hold any positions in the financial instruments referenced in the materials provided.

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