Canada

Guarantor: CPP Investment Board

Three public sector borrowers hit screens in euros on Tuesday, taking advantage of a hot market to offer zero or limited new issue premiums.

The European Union’s upcoming April 2033 euro benchmark may have to offer a little more premium than usual if it wants to match a similar trade from the European Investment Bank last week and attract strong French demand, said bankers away from the mandate. Other euro supply in the pipe includes CPPIB Capital — also with a 2033 issue — and Rentenbank in sevens.

The outlook for Canadian covered bond supply in euros is not as grim as it seems, despite the fact that the nation’s lenders have already issued three quarters of what they supplied in euros In 2017, the cross currency basis swap is not particularly compelling and senior unsecured funding is cheap in dollars.

The SSA market showed its “resilience” to the horror show in US equities early in the week as a series of borrowers printed strong dollar trades — one with its largest ever book, another with its largest size in years and not one paying up for the privilege. Some bankers suggested they may have benefited from a flight to safety but the general sense was that if the volatility comes back, public sector borrowers need not worry.

Rating: Aa2/A+/AA-

Public sector borrowers are reaping the benefits of investors looking to “weather the storm” of wider market volatility, said bankers, as investors poured cash into short dated dollar issues this week. Bank Nederlandse Gemeenten and Sweden are set to be the next issuers to benefit, after mandating for three year trades on Tuesday.

Three dollar borrowers have hit screens in a market buoyed by a pronounced Treasury sell-off.

Endeavour Mining, the Toronto-listed, UK-headquartered gold exploration company active in west Africa, has raised $300m to refinance debt with a debut five year convertible bond issue that was well subscribed, according to several sources close to the deal.

Entertainment One, the Canadian record label and entertainment company, has raised £53m, in an accelerated bookbuild, to partly finance its acquisition of the remaining shares in The Mark Gordon Company, the Hollywood production company behind films such as Saving Private Ryan, in which it already owns a 51% stake.

Data releases by a number of monetary authorities show uneven turnover in RMB-denominated FX transactions around the globe.

Public sector borrowers this week set new landmarks in what has already been an exemplary year in dollars, as KfW sold the largest 10 year dollar benchmark in 2.5 years and the Nordic Investment Bank priced the tightest deal versus swaps of 2018 so far. SSA bankers are confident that conditions will hold at both ends of the curve — allowing the possibility of further long end supply and even lower short end spreads.