Canada

Several public sector borrowers tapped the socially responsible investment (SRI) market this week, with more deals expected in February, before what many analysts expect will be a record year for the asset class.

CPPIB Capital and NRW.Bank brought well received 10 year euro green bonds on Monday, following the completion of their respective investor calls last week. Elsewhere, KfW has mandated for a euro benchmark in the five year part of the curve, having issued in the 10 year segment earlier in the month.

Guarantor: Canada

Sterling issuance from non-UK SSAs kept up its record start to the year this week, as UK bank treasuries are searching for safe places to put sterling, afraid the country will leave the EU without an exit deal.

The Sofr-linked bond market in dollars is lagging behind the progress being made in Sonia-linked sterling, SSA bankers warned this week, with some issuers waiting to see which Sofr model becomes accepted practice.

The socially responsible investment market in SSAs is picking up pace in 2019, with a supranational bringing a deal in a debut format and other issuers preparing inaugural trades.

Fearful of missing out and in the absence of competing credit supply, investors piled into higher yielding covered bonds offered by Canadian, Australian and Swedish issuers this week. A negative new issue premium Royal Bank of Canada’s five year epitomised the state of investor frenzy.

Four covered bond issuers returned to the market on Wednesday and, in contrast to the start of the year when concessions were 5bp-7bp, none paid more than 2bp.

Three sterling deals hit the SSA market on Tuesday, bringing this year’s total volume to more than double last year’s and indicating that issuers and investors are yet to be put off by the confusion surrounding Brexit.

Fearful of missing out and, in the absence of competing credit supply, investors piled into six covered bonds on Tuesday with a combined value of more than €6bn.Royal Bank of Canada’s deal epitomised the state of investor frenzy as it was able to issue the largest deal of the year with a negative new issue premium.

Export Development Canada is set to become the fourth public sector borrower to issue a debut Sonia bond this year, after picking banks on Monday for a three year bond linked to the reference rate. Meanwhile, KfW will return for its second sterling benchmark of 2019, sticking with a five year maturity it issued in earlier in the month.

Dollar SSA issuance picked up in earnest this week after a slower than usual start to the year, with a rich variety of borrowers printing deals, some in record size or with record books. Conditions are such that SSA bankers are confident supply will keep coming and demand stay high for the next few weeks — cheering news for one sovereign issuer looking to make a comeback in the currency.