KfW

KfW is looking at opportunities at the long end of the euro curve for early September, in order to dodge potential uncertainty arising from the German federal elections and the next Federal Reserve Open Markets Committee meeting. The issuer is also mulling the possibility of a 10 year Kangaroo bond in order to take advantage of Japanese investors returning to the Australian market.

A bevy of issuers looked to print dollar floaters on Wednesday and Thursday, as Federal Reserve chairman Ben Bernanke’s congressional testimonies on both days made markets too risky for issuers to attempt a fixed rate benchmark. But as Bernanke’s dovish testimony appeared to mollify markets, the era of floaters could come to an end next week.

Province of Ontario and KfW brought heavily oversubscribed dollar benchmarks at the short end of the curve on Tuesday afternoon, proving that there is demand for issuers in dollars if they are willing to pay a concession.

Province of Ontario and KfW mandated banks for dollar benchmark on Monday afternoon. If the deals are met with a strong response, they could encourage other issuers to look to sell dollar issues next week.

Following an unexpectedly heavy week of issuance from European supranationals and agencies, here are the updated funding scores for selected borrowers in the category.

Export Development Canada (EDC) sold its first sterling bond of the year on Thursday, placing a three year note. The issuer was able to increase the deal beyond its minimum size even with a volatile sterling market on Thursday morning.

KfW placed its first Swedish krona deal in a year on Monday, as a handful of investors dipped into what dealers dubbed a “new normal” in pricing that has wiped 30bp-50bp from coupons.

KfW sold its second Canadian dollar deal of the year on Tuesday, a three year fixed rate note. The deal benefited from increased interest in Canadian dollars — largely in response to falling interest in Australian dollars along with a favourable perception of the country — but also suffered from investor reluctance to buy fixed rate paper.

KfW is expected to sell its second Canadian dollar deal of the year on Tuesday after mandating banks to sell a three year bond on Monday afternoon - the same day as it announced a reduced funding need for 2013. Syndicate bankers have been predicting increased interest in Canadian dollar debt in response to a lack of supply in the currency coupled with a weakening Australian dollar.

Finland is aiming to print a euro and a dollar benchmark in the autumn and may supplement the deals with an auction and t-bill issuance, SSA Markets can reveal.

Three borrowers are all contenders for summer benchmarks despite the volatility generated in the Portuguese government bond market this week following the resignation of two government ministers. The prospect of continuing supply after a volatile few weeks will come as encouraging news to market participants who in previous years have seen bad news on one peripheral eurozone sovereign shut down the entire SSA market.

KfW was set to price a $1bn floating rate note as SSA Markets went to press. The deal has latched on to investors’ recent desire for floating rate paper and comes shortly after the agency visited investors in the US.