Four European sovereigns printed bonds in euros this week, as even the most followed names in the market need to take advantage of the few clear issuance windows that crop up. This is bad news for smaller borrowers.
Austria, Italy, France and Finland crammed into the market to raise €16bn between them, a feat made more remarkable because it is a short week on the continent.
This goes against the usual way of doing things, particularly among sovereigns, who tend to give each other a bit of space in which to syndicate bonds — an unwritten rule to make sure that no country devours demand for another's debt, keeping funding costs down.
But with volatility this fierce, good manners took a backseat to pragmatism.
Investors liked it because few curves are as liquid as sovereign ones, and with the sharp movements in rates and swap spreads that have become a frequent feature of the market this year, they prize an easy exit should they need one.
The inverse is true for smaller, less liquid deals. An investor buying part of a €500m trade in the primary market is likely to be stuck holding that for a while. This leaves smaller borrowers facing some tough challenges. They also need to be able to raise funding in the same, smaller windows as the big dogs, but drawing investor attention away from the market's giants is a Herculean task.
This gives smaller issuers two options. The first is to take the market as it comes and hope they can offer something attractive enough to drum up demand. The second is to back-load their issuance plans for the year and put faith in the market being more orderly as 2022 draws to a close and once the European Central Bank's interest rate strategy is clearer. Neither choice is without a great deal of risk.