Leads on the €500m no-grow were
Barclays, Citigroup (B&D), Rabobank and Societe
Generale.
h7EûSTARTEDûWITHû;MID
SWAPS=ûmATûANDû
gradually tightened to minus 4bp, and
could’ve gone even further. We were blown
away by the demand,” said Holmstrom, who
SAIDû-UNIlNûPAIDûNOûNEWûISSUEûPREMIUM
Books for the Aa1/AA+ bond closed over
€1.8bn, excluding joint lead interest.
A banker away from the deal, however,
ESTIMATEDûTHATû-UNIlNûPAIDûAûPREMIUMûOFû
4bp, arguing that it has an indirect
guarantee from the Finnish government,
whereas Finnvera has a direct guarantee.
Finnvera’s 1.125% May 2032s were
trading at less 7bp on Friday, according to
Tradeweb.
h-UNIlNûHASûBEENûFOCUSEDûONûDOINGûTHISû
trade since the summer,” said a second
banker away from the deal.
“It follows the Finnvera deal (a €750m 15-
year last May). That was approximately 20bp
OVERûINTERPOLATEDû&INLAND ûANDû-UNIlNûISû
mid-20s over. This is their most strategic
euro deal ever and they sounded the market
quite well.”
A third banker away from the deal
pointed out that while the issuer is not
4RIPLEû!ûRATED ûITûDOESûBENElTûFROMû%#"û
support, which investors take comfort in.
-UNIlNûHASûNOûFURTHERûPLANSûTOûISSUEû
euro-denominated benchmarks this year,
although it is considering taps, but will be
active in US dollars, sterling and Australian
dollars.
)TûISûFOCUSINGûONûTHREEûANDûlVE
YEARû
tenors, depending on market conditions.
The EUROPEAN FINANCIAL STABILITY FACILITY,
however, is a regular in the euro market,
last week sending a request for proposal to a
selection of banks for a deal this week.
Bankers expect the EFSF to look at the
longer end of the curve, potentially issuing a
dual-tranche transaction.
And the EUROPEAN UNION has sent out an
RFP for a euro benchmark with an
intermediate to long-dated tenor. The issuer
was heard to be looking to raise €3.2bn
across two tranches.
STERLING
MARKET EAGERLY AWAITS SALE
OF UK LINKER
It is still full speed ahead for sterling issuers
in the SSA market, with all eyes on the UK’s
latest debt sale, a tap of the 0.125% 2048
index-linked Gilt.
The UK DMO has mandated Bank of America
Merrill Lynch, JP Morgan, Lloyds and Santander,
and needs to raise £3.5bn-£4bn to meet its
REQUIREMENTSûFORûTHEûûlSCALûYEAR
“We won’t get the next quarter’s remit
until post-budget in March, so you might
lNDûTHATûTHEûNEXTûSYNDICATIONûDOESNTû
come until late June or early July,” said
Craig Inches, head of short rates and cash
at Royal London Asset Management.
“We expect demand to be fairly
robust. Pension fund demand and the
BIDûFORûGLOBALûINmATIONûASSETSûISûPRETTYû
strong.”
"UT ûFORûINVESTORS û5+ûINmATION
LINKEDû
products continue to look expensive.
“The market is not good at predicting
WHEREûINmATIONûISûGOINGûTOûBEûAûLONGûWAYû
INTOûTHEûFUTURE vûSAIDû*OHNû4AYLOR ûlXEDû
income portfolio manager at
AllianceBernstein. “There is a structural
shortfall in supply of long-dated index-
linked Gilts, which partly explains why they
are expensive.”LARGEST DEAL
So far this year, SSA issuers have raised
£6.45bn in the sterling market - on track to
meet the £12.125bn raised during the full
month of January last year.
“In general, investment-grade credit
SPREADSûHAVEûBEENûPRETTYûlRMûINûTHEûlRSTû
few weeks of January. Issuance was still
fairly light post-MiFID II and there’s quite a
lot of demand,” said Inches.
SSA sterling issuance came at tight levels,
with the WORLD BANK last week taking
ADVANTAGEûTOûRAISEûaBNûINûAûlVE
YEARû
deal.
“Bank treasuries are quite active in
sterling high-grade Triple As,” said a banker
away from the deal. “In the environment of
rising interest rates, people want to keep
their money short, so it makes sense to go
FORûTHREESûANDûlVESv
The World Bank transaction was priced at
27bp over the 1.75% September 2022 Gilt,
with a coupon of 1%. It drew over £1.5bn in
orders via leads Barclays, HSBC and NatWest
Markets.
The deal was the World Bank’s largest
ever sterling print. Last year, it did three
sterling deals worth a combined £1.15bn,
versus US$15bn in US dollars.
CAISSE DES DEPOTS ET CONSIGNATIONS went
for a more modest size of £250m. The
no-grow three-year attracted orders of over
£975m.
Leads NatWest Markets, RBC and TD set the
spread at 36bp over the 1.5% January 2021
Gilt.
On Monday, the EUROPEAN INVESTMENT BANK
took advantage of a US holiday to draw
attention to its March 2021 sterling
benchmark.
The long three-year priced at 29bp over
the 1.50% January 2021 Gilt via Bank of
America Merrill Lynch, NatWest Markets, RBC
and TD.It followed a £1bn tap of the EIB’s
$ECEMBERûSûINûTHEûlRSTûWEEKûOFû
January, which was priced at 32bp over
Gilts.
“There’s a lot of cash around,” said a
banker away from the deal. “The basis is
attractive, especially at the front end, for
issuers who need sterling outright. Two and
three-years will be popular.”NON-CORE CURRENCIES
SIX AGENCIES RAISE A$625mSix European government-guaranteed
agencies accessed the Kangaroo 10-year
segment last week, raising a combined
A$625m (US$500m) from new issues and
taps of existing bonds.
On Tuesday, Dutch lender BANK
NEDERLANDSE GEMEENTEN (Aaa/AAA/AA+) tapped
its 3.30% July 17 2028s for A$80m to increase
the issue size to A$280m.
Deutsche Bank, Nomura and RBC Capital
Markets were joint lead managers on the
reopening, which was priced at 98.645 for a
yield of 3.455%, equivalent to 63bp over
asset swaps and 69.25bp wide of the May
2028 ACGB.
On the same day, Norway’s Triple A rated
KOMMUNALBANKEN issued A$150m of 10.5-year
bonds via Daiwa, JP Morgan and TD Securities.
It priced the 3.40% July 24 2028s at 99.781
for a yield of 3.425%, 60bp and 65.75bp over
asset swaps and ACGBs.
KBN added A$50m to the bond offering
the following day at 99.716 and a 3.4325%
yield, 60bp and 66bp over asset swaps and
ACGBs.
On Thursday, Dutch agency NEDERLANDSE
WATERSCHAPSBANK (Aaa/AAA/AA+)
printed a A$170m 10.5-year bond issue
through Daiwa, JP Morgan and RBC Capital
Markets.
The 3.45% July 17 2028s were priced at
99.803 for a yield of 3.4725%, 61bp and
66.25bp wide of asset swaps and ACGBs
Two regular Triple A rated German
issuers priced deals inside their European
peers, including RENTENBANK, which added
A$50m to its 3.25% April 2028 line on
Tuesday, increasing the issue size to
A$525m.
The reopening was priced at 99.824 for a
yield of 3.27%, 46bp and 50.25bp wide of
asset swaps and ACGBs.
KFW also secured superior pricing on
Wednesday for a Deutsche Bank-led A$100m
increase to its 3.20% March 15 2028s that
lifted the outstanding issue to A$400m.
The reopening, via joint leads RBC Capital
Markets and Nomura, was priced at 99.227 to
yield 3.29%, 46bp and 49.5bp wide of asset
swaps and ACGBs.BONDS SSAR