LBBW

Public sector borrowers found themselves in a tricky position as they returned to the primary euro market this week as they attempted to strike a balance between current secondary levels and where the market is heading with the arrival of the European Union’s giant borrowing programme from September.

The primary euro public sector bond market continued its busy week on Thursday with KfW and KommuneKredit issuing new 10 and 20 year deals, respectively.

After KfW mandated banks on Wednesday to join the 10 year euro flurry, the question on the minds of market participants is at what level the Germany agency will choose to start at with such a wide differential between relative and fair value.

The State of Baden-Wuerttemberg only managed to sell around half of its €1bn 10 year bond to investors on Tuesday as it came flat or slightly through its curve alongside competing supply in the tenor.

Freudenberg, the German industrial conglomerate, has signed a €500m revolving credit facility, as European lenders say that refinancing facilities are expected to take up a large portion of their time for the rest of the year.

Ista, the German energy company, has signed a €1.85bn sustainability-linked loan, as interest in this structure among European companies returns to near pre-crisis levels.

Ista, the German energy company, has signed a €1.85bn sustainability-linked loan, as European corporates considering the ESG-linked structure nears pre-crisis levels.

German drug packaging manufacturer Gerresheimer launched a Schuldschein on Tuesday, according to market sources, ahead of €190m of debt maturing this November.

A pair of German sub-sovereigns had the primary public sector bond market to themselves this week, with each taking €500m at tight levels to their secondary curves.

The State of Lower Saxony was the sole borrower active in the primary public sector bond market on Thursday as it raised €500m with a 10 year at a negative yield. The deal ended up comfortably subscribed in spite of a slow start to the book-build.

The State of Lower Saxony mandated banks on Wednesday to run a 10 year euro benchmark on Thursday, as German states remain the only action in the public sector primary market.

KfW will lead the charge in the euro public sector bond market on Tuesday with a €3bn green bond that will match its biggest ever deal in the format. Eurofima and the State of Berlin are also preparing to bring bonds to the euro market.