KfW

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.

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.