German Sovereign
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The dollar bond market for public sector borrowers this week rounded off a spectacular January, with many bankers describing it as “perfect” and the best in five years. -
A trio of issuers brought deals across the short end of the dollar curve on Wednesday, adding to what one SSA syndicate head described as the “ideal January”. Supply looks to have dimmed for now, with no deals on screen for Thursday and Chinese New Year holidays next week likely to halt benchmark issuance, but bankers believe conditions are so hot that arbitrage deals or floating rate notes could still break through.
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Guarantor: Financial Market Stabilisation Fund of the Federal Republic of Germany
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One of the busiest days ever in the public sector dollar market ended with five issuers sitting on deals printed at the top end of their size targets and with pricing tightened from initial thoughts. Another borrower is already out for Thursday business and bankers predict that conditions are so “incredible” that deal flow will stay healthy into next week — no matter what policy statements incoming US president Donald Trump makes at his inauguration on Friday.
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The pipeline for euro issuance is filling up once again as the European Investment Bank looks to raise funds at 10 years, although a deal from KfW on Tuesday appeared to struggle to reach €1bn.
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A quartet of public sector borrowers are set to cram into the front end of the dollar curve on Wednesday, as bankers outlined a triple whammy of factors driving the squeeze.
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More dollar deals are expected next week following a searing few days for trades in the currency, but despite bumper books and deal sizes, some in the market feel there is still some price discovery work to do. Meanwhile, US president-elect Donald Trump made his presence felt on the issuance calendar.
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More public sector borrowers want to enter a red hot sterling market, including some that have barely visited the market in years.
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The market for medium term notes is expected to come to life over the next few weeks after a subdued start to 2017, with some bankers and issuers touting floating rate notes as the next big thing.
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Export Development Canada showed on Wednesday that despite some big deals this year in fives, there is still plenty of demand in the three year part of the dollar curve as it took the rare step of increasing a deal from its initial size target. The trade came as a trio of other dollar deals hit screens.
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Public sector borrowers tore $10bn of funding from the dollar market on Tuesday, shaving several basis points from initial price thoughts in the process. Only one benchmark is on screens for Wednesday, but SSA bankers expect next week’s run-up to the inauguration of Donald Trump as US president on January 20 will be — in Trump terminology — “huge”.
