Public sector borrowers have done exceptionally well in funding their 2023 targets so far — to the extent that probably few had thought possible at the end of last year.
The market then seemed beset by risks: inflation, the interest rate trajectory, quantitative tightening and the large supply the market would have to stomach in the new year.
Fast forward five months, and the SSA market has shown itself more resilient than many gave it credit for.
Investors have stomached 20% more volume than a year ago, despite major central banks continuing to tighten monetary policies.
They have done so while picking their way through unexpected roadblocks such as the collapse of Silicon Valley Bank, the Credit Suisse takeover, and most recently the US debt ceiling crisis.
Most issuers are heading into the summer after getting ahead of the curve on financing their annual targets.
Many are two thirds funded, if not more. Although they have not been pushing out on maturities as much as they want, and perhaps have had to settle for smaller deal sizes than they were used to, new issue concessions have stayed mostly stable and the order book coverage remains largely intact.
The SSAs which are well advanced in their funding have done so through careful planning and being flexible and nimble.
With the calendar disrupted by data releases, central bank meetings and public holidays — and of course the elephant in the room, the European Union’s monthly or even fortnightly syndications — the windows have become shorter and more sporadic. But issuers have made sure to seize every opportunity there was.
Sometimes compromises have had to be made, as the competition tends to be fierce whenever there is a window. That can mean taking less size or leaving more money on the table for investors. But issuers have been adapting to that.
All of that means SSAs are in a strong position heading into the summer.
They can afford to take a breather instead of desperately trying to grab every chance to issue. They have earned themselves a holiday to recharge, regroup, and return confidently afterwards.
Having said that, many are sure to doze with one eye open. Opportunities will crop up, and on the evidence of this year so far, SSA funding officials will not be caught napping.