KfW

Attractive funding rates and strong demand from Asian investors drew a flock of supranational and agency names to Australian dollars this week — and bankers say at least six names are looking to print in a market that often offers more attractive funding levels than dollars or euros.

The European Investment Bank and KfW completed their first sterling deals of 2015 on Thursday, 8 January, in what bankers said was a sign of more to come, as the sterling/euro basis swap is well in favour of euro based issuers.

KfW showed that pricing through mid-swaps is no obstacle at the start of 2015, as on Thursday it built a comfortably oversubscribed book on the first euro deal to come through swaps this year. The issuer plumped for a 10 year deal — an option also taken by Province of Quebec on Thursday and a tenor that many SSA officials think the European Financial Stability Facility will take next week.

European Investment Bank and KfW found strong demand in sterling on Thursday as bank treasuries, central banks and real money accounts piled in for a piece of the issuers’ inaugural deals in the currency for 2015.

KfW priced a more than twice subscribed Kangaroo bond on Wednesday — its first deal in the format this year — as other supranationals and agencies lined up with taps and new issues for their own inaugural 2015 Australian dollar deals.

KfW targeted the belly of the Kangaroo curve for its first new issue of the year on Tuesday.

Having expected to hold off for a week or two, some sovereign, supranational and agency borrowers are rethinking their plans and contemplating the possibility of bringing forward euro issuance plans to this week.

KfW has sold a rare, privately placed note with a step-up inverse floating rate structure, which dealers said could be a sign of other similar trades to come.

Three of the largest euro funders in the supranational and agency market are set to reduce their issuance in the currency next year. But renminbi could form a bigger slice of at least one issuer's 2015 business.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark as of Thursday's close. The source for secondary trading levels is Interactive Data.

Europe’s most frequent issuers in the Japanese Uridashi market are testing new structured products as investors increasingly look to equity linked paper to enhance yields.

Public sector borrowers looking to sneak in dollar bonds before the market traditionally closes for the year on Thanksgiving next week can step into a roaring hot market. The amount of cash available to be put to work has been resoundingly demonstrated by a pair of borrowers printing some of the largest deals ever at the long end of the curve.