KfW

The euro market was easily outshone by dollars this week. While it produced a pair of benchmarks that were comfortably oversubscribed, the concession that issuers had offered contrasted sharply with dollars, where three issuers priced $13bn of debt in just 48 hours at levels right on top of their curves. But that’s no reason for despair, the euro market is still robust.

The International Finance Corporation (IFC) sold the largest ever Kauri bond by an SSA issuer on Tuesday, capturing a record set just a fortnight before. Activity in New Zealand dollars has also been brisk in Eurokiwi format, with investors drawn in by attractive yields compared to Australian dollars.

The Kingdom of Sweden is set to price its largest ever dollar bond on Wednesday afternoon, a $3bn five year as SSA borrowers revel in the strength of the primary market in dollars. The trade comes on the same day as KfW and a day after the EIB priced $5bn three year global deals each.

KfW sold a tap of 10 year Australian dollar debt on Thursday, ending a dry spell in the Kangaroo market. The issuer was spurred into action by reverse inquiries from investors, but was able to draw demand from a wider range of investors during the bookbuild.

Despite the build-up of volatility in the market on Tuesday, KfW has been able to issue a three year benchmark, which will be priced this afternoon.

A deluge of sterling deals could burst through this week as issuers and investors’ pricing thoughts moved into alignment, dealers said after KfW sold a £400m tap with no new issue premium on Tuesday.

The future looks set to be one of smaller but more frequent deals for supranational borrowers if Tuesday’s prints from the Inter-American and Asian Development Banks are anything to go by. Both borrowers opened books on new global format benchmarks in the morning with pricing expected later in the day. Meanwhile, Bank Nederlandse Gemeenten tested the notoriously tricky 10 year maturity following KfW’s success with a similar deal last week.

The Inter-American Development Bank (IADB) and the Asian Development Bank (ADB) are set to answer the burning question in the SSA dollar market on Tuesday as they attempt to find the price at which the apparently rampant appetite for SSA dollar paper extends to tightly priced supranational credits.

A handful of borrowers have begun a raid on the dollar market all the way along the curve following the EIB’s triumphant reopening of the market on Tuesday. KfW looks to be powering its way through a 10 year global, KBN is preparing to price an oversubscribed five year deal and Municipality Finance is out with a two year FRN.

German agency, KfW on Tuesday followed Monday’s prelude from Bank Nederlandse Gemeenten with the first full orchestra euro benchmark of the year. The deal will be €5bn in size but will still be priced at the tight end of guidance.

KfW left a distinctly bullish hoofmark on the dollar market on Tuesday afternoon, mandating three banks for a 10 year global. It will be the first issuer to print in what is often a tricky tenor in dollars, and the deal comes as books on the first dollar benchmark of the year — a five year global for the European Investment Bank — swelled to over $7bn. Kommunalbanken has also mandated for a five year.

Buoyant conditions on the first proper day of trading after the Christmas break indicate that SSAs are in for a red hot start to issuance next week when as much as €25bn of benchmark issuance could hit screens. But ultra low yields could mean issuers have to cough up when it comes to new issue premia.