This time around, the AAA (Fitch) rated
state is following the lead of peers Berlin
and Brandenburg, which priced 15-year
tenors during the summer flat to fair value.
“[Lower Saxony is] also pricing fair, which
is very attractive for investors looking at
German Laender,” said a second banker.
The market has moved a bit from July,
when the bulk of 15-year German paper was
sold, giving room for Lower Saxony to price
tighter.
With books over €1.3bn for a no-grow
€500m, Brandenburg also tightened talk by
2bp from guidance to price at swaps less
2bp. It is now bid at less 5bp, according to
Tradeweb prices.
Berlin’s €1bn trade came 1bp inside talk
at swaps flat and was increased by €250m at
less 2bp a month later. It was bid at less
3.4bp last Tuesday.
The increased demand for longer
maturities allowed Berlin to return to the
market last month, pricing a €500m 20-year
at less 1bp. That has also tightened, and is
now bid at less 2bp.
Wirtschafts- und Infrastrukturbank
Hessen was the last German borrower at 15-
years, selling a €500m no-grow lastThursday 2bp inside guidance at 1bp over
swaps. Leads, however, did not consider the
Hessen-guaranteed agency to be a good
comp.
“It can only be compared in terms of
maturity. It started a bit wider and it is also a
guaranteed institution (rather than a state),”
said a third banker.
DekaBank, DZ Bank, Natixis, Nord/LB and
UniCredit are lead managers for Lower
Saxony’s deal.UNENTHUSED TAPKFW kept the euro market moving with a
€1bn tap of its March 2023 that came at a
negative yield, while NORTH RHINE-WESTPHALIA
(Land NRW) took the opportunity to reopen
its €1bn February 2038 for €250m although
there were no book updates on either trade.
KfW indicated at the end of last year that
it would respond to investors’ need for
highly liquid bonds by considering
increasing its outstanding euro benchmark
bonds to up to €6bn. It has carried out this
strategy throughout 2018.
The tap, which took the issue size to
€5bn, priced last Wednesday at swaps less28bp, which equated to 24.7bp over Bunds.
Barclays, DZ Bank and NatWest arranged the
transaction.
“This is an arbitrage trade for KfW -
they’ve done a few of those this year,” a lead
said. “They come on the bid side of the
market and they’re not always fully sold,
which is the case [with this deal] but we’re
comfortable with the risk.”
KfW offered some supply at the short end
of the curve, which has otherwise been
dominated by longer-dated issuance.
“A lot of clients had the view that, with less
QE, swap spreads would tighten and SSA
secondaries would widen,” the lead said.
“However, this has not happened and
despite the recent supply, swap spreads
haven’t really moved. So there are a lot of
investors looking to cover their shorts - so as
well as the traditional demand you would
get for this type of trade, you get demand
linked to trading strategies.”
KfW was not the only deal to price in line
with guidance without book updates. Land
NRW, rated Aa1/AA-/AAA (Moody’s/S&P/
Fitch), priced unchanged from guidance, at
1bp over mid-swaps.
For a second banker, both KfW and NRW
failed to impress because they are recurrent
names in the euro market.
“WIBank and Lower Saxony were
successful and oversubscribed trades
because they priced 15-year paper, hitting
the sweet spot for investors. They were
proper benchmarks, offering issuance
concession, not a 20-year tap,” he said.
Bank of America Merrill Lynch, Deutsche Bank,
JP Morgan and NORD/LB arranged the NRW
deal.EIB OPENS NEW SRI SEAM WITH
SUSTAINABLE BONDThe EUROPEAN INVESTMENT BANK sold a debut
€500m eight-year Sustainability Awareness
Bond last Thursday, further building its
already strong sustainable credentials.
The supranational is no stranger to
innovation in that field, and since it
launched the first Green bond in 2007 the
asset class has grown by leaps and bounds,
moving beyond the original Climate
Awareness Bond.
The proceeds will be allocated towards
EIB’s lending activities for sustainable use
and protection of water and marine
resources, waste prevention and recycling,
pollution prevention and control and
protection of healthy ecosystems.
The EIB was able to harness the deal’s
small size to push on pricing, printing with
no concession at 20bp through mid-swaps,
the tight end of the less 18bp area guidance.
It was helped by the strong demand, with
orders passing the €1.1bn mark.28 International Financing Review September 8 2018ALL SOVEREIGN BONDS IN EUROS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues €(m) (%)
1 Barclays 16 12,145.77 12. 2
2 Citigroup 17 9,682.9 9 9 .7
3 JP Morgan 14 9,664.28 9 .7
4 BNP Paribas 12 7 ,660.47 7 .7
5 NatWest Markets 7 7 ,419.18 7 .4
6 HSBC 11 7 ,339.59 7 .4
7 SG 11 5,984.29 6. 0
8 Santander 5 4,589.15 4 .6
9 Goldman Sachs 8 4,316.29 4 .3
10 Credit Agricole 6 4,193.95 4 .2
Total 36 9 9,724.45
Excluding ABS/MBS.Source: Thomson Reuters SDC code: N4ALL INTERNATIONAL US$ BONDS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 JP Morgan 486 136,487.81 9 .7
2 Citigroup 490 133,366. 49 9 .5
3 BAML 411 109,294.78 7 .8
4 Barclays 297 9 7,878.20 7 .0
5 Goldman Sachs 289 90,003.6 1 6. 4
6 HSBC 282 7 9,195.28 5.6
7 Morgan Stanley 280 7 4,829.71 5.3
8 Wells Fargo 261 65,443.97 4 .7
9 Deutsche Bank 257 6 1,110.37 4 .3
10 Credit Suisse 255 52,109.84 3. 7
Total 1,688 1,405,335.03
Including Euro, foreign and global issues. Excluding equity-related debt, US Global ABS/MBS.Source: Thomson Reuters SDC code: O1ALL SUPRANATIONAL BONDS IN EUROS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues €(m) (%)
1 Credit Agricole 19 6,355.32 9 .3
2 HSBC 14 5,463.92 8. 0
3 UniCredit 10 5,330.79 7 .8
4 Commerzbank 12 5,279.93 7 .8
5 JP Morgan 9 5,116.04 7 .5
6 Barclays 8 5,099.94 7 .5
7 SG 8 4,176.26 6. 1
8 Deutsche Bank 11 4,067.59 6. 0
9 DZ Bank 9 3,509.88 5. 2
10 Goldman Sachs 6 3,120.03 4 .6
Total 63 67 ,976.55
Excluding ABS/MBS.
Source: Thomson Reuters SDC code: N5MUNICIPAL, CITY, STATE, PROVINCE ISSUES IN EUROS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues €(m) (%)
1 UniCredit 32 4,896.63 14 .3
2 DGZ-DekaBank 26 3,565. 12 10 .4
3 HSBC 21 3,326. 28 9 .7
4 LBBW 24 2,825. 70 8. 2
5 Nord/LB 21 2,214.64 6.5
6 Deutsche Bank 18 2,192.50 6. 4
7 JP Morgan 13 2,091.98 6. 1
8 DZ Bank 15 1,393.3 4 4 .1
9 Credit Agricole 6 1,233. 27 3.6
10 BBVA 5 950 .36 2.8
Total 97 3 4,309.25
Excluding ABS/MBS.
Source: Thomson Reuters SDC code: N76 Bonds 2250 p25-55.indd 28 07/09/2018 19:29:58