KfW

SSA syndicate bankers are predicting either a seven year benchmark from the European Financial Stability Facility (EFSF) next week, or a deal at the far end of the curve, after they made their recommendations to the borrower this week. The European Investment Bank and KfW are also expected to issue either next week or the week after.

The Council of Europe Development Bank (COE) will add to a rush of short-end dollar supply on Thursday, having mandated banks for a five year global deal. The trade follows a five year dollar global from KfW on Wednesday afternoon and deals from Swedish Export Credit and Österreichische Kontrollbank on Tuesday.

KfW and Unédic have both announced new benchmark mandates in what is expected to be a week of heavy supply in the SSA market.

Australian investors have a deserved reputation for being fussier about what they buy than their European counterparts — there’s a reason that the Kangaroo market has traditionally been dominated by the cream of the SSA crop. However, things are starting to change.

KfW, which is expected to be first out of the blocks with a five dollar year print on Tuesday or Wednesday next week, will take encouragement from the European Bank for Reconstruction and Development’s (EBRD) impressive sale of the same product on Thursday.

The Asian Development Bank (ADB) is expected to price an increase of four year Kangaroo bonds on Friday, rounding out a busy week for SSA issuance in Australian dollars. KfW sold five year debt in the currency on Thursday.

KfW mandated banks for an increase of five year Kangaroo debt on Wednesday, while Rentenbank and the Nordic Investment Bank tapped Kanga bonds at the long end of the curve — taking advantage of a search for higher yielding paper in the currency.

Blow-out dollar deals by the European Investment Bank and Network Rail, which were priced on Wednesday afternoon, have demonstrated the rampant appetite for SSA paper. And now more issuers look set to take advantage of the conditions.

KfW sold four year euro debt on Monday afternoon, looking to take advantage of demand for short-dated paper in an attempt to achieve tight pricing. While the deal priced tightly to the issuer’s curve, with little or no new issue premium according to bankers close to the deal, it fell slightly short of full subscription.

The International Finance Corporation (IFC) will price a $2bn June 2018 bond later on Wednesday afternoon at mid-swaps less 3bp, which will be the tightest supranational five year deal so far this year. It is also flat to the IFC’s outstanding 2017s and 3bp inside the trading level of the outstanding Inter-American Development Bank (IADB) five year.

KfW sold a tap of four year New Zealand dollar debt on Wednesday afternoon, seeing a good response from institutional investors. The issuer is looking at the possibility of setting up a Kauri programme to expand its borrowing in the currency, SSA Markets understands.

The lack of yield on offer in dollars and euros is encouraging investors to look towards niche and local currencies in an effort to maximise the return on their investment. With the EBRD selling its first ever Vietnamese dong bond this week, niche currency bankers are confident in the outlook for emerging market currencies.