KfW

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.

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.