Agencies face up to more QE, new platforms, life after Libor

European agencies trod carefully at the start of 2019 amid unsettled bond markets as the European Central Bank pulled the plug on its quantitative easing programme. But as the year has progressed, spreads and yields have rallied strongly as it becomes increasingly likely that the ECB will inject further monetary stimulus to aid lacklustre growth in the eurozone. Meanwhile, funding conditions in dollars pose a challenge with very tight US Treasury swap spreads and an unattractive euro/dollar basis swap keeping many of the European agencies away from the currency this year. Elsewhere, agencies are stepping up their preparations to follow their supranational peers in issuing bonds linked to the new risk-free rates in sterling, dollars and eventually euros as the date for Libor discontinuation approaches. Issuers are also having to cope with less information than ever before from bank syndicates as a result of increased regulation from MAR and MiFID. An initiative from the ECB, aiming to revolutionise the issuance and distribution of euro bonds has also placed the role of investment banks in the syndicate process under the spotlight. Some of the world’s leading agency issuers came together during the Global Borrowers & Bond Investors’ Forum in London in June to discuss these topics and many more in a specially convened roundtable.