German Sovereign
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The Federal State of Berlin’s new 20 year bond on Tuesday was almost three times oversubscribed, as investors took advantage of the hefty pick up over Bunds. -
Concerns over the upcoming budget from Italy’s populist government — as well as the months’ long economic crisis in Turkey — took its toll on government bond yields in the eurozone periphery this week. But a hunt for safe assets among investors did play into the hands of top tier credits.
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KfW received solid demand for its €1bn global June 2020 benchmark tap on Tuesday, as investors lapped up the rising swap spreads caused by political tensions in Italy and economic crisis Turkey, and looked for safe assets.
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NRW.Bank has promoted Besnik Berisha to be its new head of funding, with a focus on long term debt.
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The Bank of England on Thursday raised its base rate by 25bp to 0.75%, a move that was widely expected and one that brought next to no market reaction — keeping conditions calm for what could be a record year for SSA sterling issuance. L-Bank added to that tally on the same day with a deal that came 25% above its initial size target.
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The State of North Rhine-Westphalia’s decision to tap into a glut of long end euro demand won the praise of BondMarker voters, as it fell just short of an average score of 8.0.
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Investor appetite remains strong for longer dated euro SSA bonds, encouraging the likes of EFSF and KfW to tap the long-end of the curve this week. But the question is: will the demand last, and for how long?
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Investors are upbeat about the prospects for Italian government bonds, believing that “market forces” will act as buffers to the effects of exuberant populist government policy. The sovereign should be supported at the long end during an auction this week, said some But in the core of the eurozone core, some investors are looking to keep things short.
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KfW on Monday priced a tap of its recent 15 year euro bond in line with guidance, doubling the overall deal size to €2bn.
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A German sub-sovereign astonished the SSA market this week, selling a 50 year benchmark to show that, despite the expectations of rising rates in euros, some investors at least are still happy to put money into assets at the ultra-long end. Lewis McLellan reports.
