KfW
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KfW on Wednesday posted a clear sign that the path to 10 year dollars is wide open for public sector borrowers, printing a $3bn global that was the largest trade in the tenor for 2.5 years. That left SSA bankers rubbing their hands and speculating over which borrower might come next. -
Public sector borrowers wrapped up a trio of short end dollar trades on Tuesday, with the tightest issuer able to grind in pricing to the lowest level from an SSA this year and the higher yielding names finding ample demand despite ending up at similar spreads. SSA bankers are confident that the strong conditions will also ring true at the long end for KfW, which has mandated for its first 10 year dollar benchmark in nearly three years.
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There have been high levels of issuance in the long end of the Aussie dollar curve this week, with a trade from KfW on Wednesday taking advantage of an increase in demand.
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SSAs enjoyed a fine week in the sterling market, raising a total of nearly £2bn as bankers pointed to several factors that could be driving demand.
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The euro market has, after a wobble in the first week, adjusted admirably to a new price level and got off to a spectacular start, providing record book sizes and smooth executions across the curve.
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Public sector borrowers are finding funding conditions beyond their wildest dreams, with not just last year’s staples of dollars, euros, sterling and Australian dollars on offer across the curve but the Canadian and New Zealand currencies coming into play too.
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Public sector issuers rounded out a superlative week for dollars with sparkling results across the curve on Thursday. Bankers are confident that issuers wishing to print in the coming weeks should find that investor demand outweighs any of the political concerns that brought volatility to rates over the last few days.
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The Inter-American Development Bank provided further proof on Wednesday that there is deep demand at the five year part of the dollar curve — but another supranational is stepping up to test the long end of the currency for the first time this year.
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The start of the year has been beset by new regulation and a widening spread environment but, for issuers canny enough to navigate the new levels, investors are eager to put cash to work.
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The euro market is providing borrowers with superb execution — KfW gathered its largest ever book for a 10 year on Tuesday — but investors are requiring healthy new issue concessions in order to commit.
