German Sovereign
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Public sector borrowers are set to enjoy yet more enviable funding conditions in euros, with central banks on an even more dovish path than before. At least one benchmark is in the pipeline for next week, while this week a core eurozone issuer sold its largest ever deal. -
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Dollar SSA issuance is expected to pick up next week, thanks to a change in the euro/dollar basis swap that is making issuance in the currency more attractive for euro funders. There was still a smattering of dollar trades this week, including a Sofr-linked floater that broke new ground for the format.
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Guarantor: Financial Market Stabilisation Fund of the Federal Republic of Germany
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The State of North Rhine Westphalia will be able to issue floating rate notes linked to Sonia and Sofr under its new medium-term notes’ programme, which will be released in the next few months.
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The State of North Rhine Westphalia sold an unusually large amount of debt in the SSA market on Wednesday through a dual tranche offering, with one of the bonds coming with a sustainable label.
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L-Bank on Tuesday became the first SSA issuer to sell a Sofr-linked floating rate note with Reg S only documentation. The $500m no-grow deal had over $600m of orders, with $125m of those coming from the leads — which said any stock they were left with would be useful for providing paper to investors looking to test their Sofr systems in the coming weeks and months.
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The European Investment Bank and FMS Wertmanagement sold well oversubscribed issues in the sterling SSA market on Tuesday before an expected quieter period for new issues in the currency next week as parliament votes on prime minister Theresa May’s revised Brexit deal.
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L-Bank is set to bring the first ever Reg S only Sofr-linked bond on Tuesday. The German agency will be joined in the dollar SSA market by Japan Finance Organization for Municipalities, which has picked banks for its first benchmark of the calendar year.
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Dollar swap spreads tightened dramatically in the middle of the week — with bankers at a loss to explain why — but the SSA sector was still “rock solid” in one syndicate head’s words, so the currency should be open for business next week. The only two dollar trades this week — a bond market return from CDP Financial and first deal of the year from Erste Abwicklungsanstalt — both went well.
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