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Pimco took part in Deutsche Bank bond offerings: source

Stock Markets Oct 12, 2016 05:42PM ET
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By Jennifer Ablan

NEW YORK (Reuters) - Pacific Investment Management Co, which oversees more than $1.5 trillion in assets under management, took part in Tuesday's $1.5 billion Deutsche Bank AG (DE:DBKGn) bond offering as well as a $3 billion bond deal on Friday, a source familiar with the matter told Reuters on Wednesday.

Pimco, a unit of financial services provider Allianz SE (DE:ALVG) and one of the largest asset managers in the world, was said to be a major investor in both bond offerings, the source added. A spokeswoman for Pimco declined to comment.

Deutsche's bond spreads have been under pressure since September, when the U.S. Department of Justice asked the bank to pay $14 billion to settle an investigation into its selling of mortgage-bond securities.

But after raising $4.5 billion over two days, both times investor-initiated, the bank instilled some confidence that it is making progress in putting some problems behind it.

Deutsche paid a new-issue concession of around 50 basis points on Friday's deal, which was a chunky premium compared with its outstanding bonds.

But it was broadly in line with where its paper was trading after the sell-off occasioned by the Justice Department request.

Tuesday's self-led tap of its 4.25 percent October 2021s priced at 100.263 and a spread of 290 basis points over Treasuries for a yield of 4.191 percent, offering investors a premium of around 25 basis points.

The bond that priced Friday, which was sold to a limited number of investors, had rallied up to 40 basis points in secondary markets after clearing at 300 basis points over Treasuries.

Many of the same investors bought in again on Tuesday. Friday's deal was the first Deutsche Bank had sold in the U.S. dollar market in five months.

David Schawel, who runs opportunistic income strategy at New River Investments, said Pimco's involvement makes sense. "It's accretive to yield and their exposure is likely not big enough across portfolios to make a dent if it goes bad," Schawel said.

IFR, a unit of Thomson Reuters Corp (TO:TRI), first reported on both Deutsche Bank bond offerings.

Pimco took part in Deutsche Bank bond offerings: source
 

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