Search results for

US dollar swap spreads slipped precipitously this week: by yesterday (Thursday) 10 year spreads were no more than 90bp bid, while five year spreads were around 75.5bp bid. Earlier in the session, 10 year prices were said to have sunk as low as 88.5bp in brisk trading. Dealers report around $1bn traded at five and 10 years. These prices had come in by about 3bp from the previous night's close and dealers thought it significant that 10 year spreads had traded below 90 for the first time in a number of months.

TDL Infomedia this week priced a dual tranche sterling/dollar offering via lead manager CIBC Wood Gundy, making it only the second issuer to successfully tap the European high yield market since the summer. The slow pace of new issuance looks set to continue with just one issue, a Eu175m issue for ESAT Telecom, firmly scheduled for launch in October. The Irish telco will be tapping the high yield market for the third time when it prices the 10 year offering via CSFB in the week of October 18. The deal is currently being roadshowed.

The Republic of the Philippines continued to enhance its status as Asia's most sophisticated and prolific borrower with the launch this week of its most ambitious offering to date. With its exchange of Brady debt for new uncollateralised global bonds, the republic should further distance itself from the ranks of stigmatised debtor nations, ease its current fiscal burden and greatly increase the flexibility of its liability management.

Bond markets were subdued this week, with market participants awaiting the results of the US FOMC, Bank of England and European Central Bank meetings. No changes to interest rates were announced, but both the Fed and the ECB announced a move towards a tightening bias. ECB president Wim Duisenberg said that he would need more evidence of a pick up in European inflationary pressures before tightening monetary policy. His comments, coming after a week of higher than expected European price and output figures, suggest that the market's bearish trend ahead of these data was overdone. After falling through the week, government, swap and credit markets stabilised on the news of no rate hike. But the Euromarkets remain bearish and although many borrowers are still looking to raise funds ahead of the year end, the opportunities are fading. With the US Fed likely to increase interest rates at its meeting next month, the likelihood of heavy supply before the end of the year is diminished further. Primary traders this week said they wanted to avoid having bonds on their books come November. In a quiet week, Crédit Foncier de France grabbed the limelight with its Eu1.5bn long 10 year obligations foncières deal, opening the new market for French style Pfandbriefe. Crédit Local de France's Dexia Municipal Agency should launch a five or 10 year deal next week totalling Eu2bn to Eu4bn. Caja Madrid launched what was arguably the most successful of the mortgage bonds to have emerged from Spain in the last month. Launched at 7bp over Euribor, the Eu1bn 10 year cédulas hipotecarias tightened by 2bp. Corporates generally gave the difficult market a wide berth, but after careful preparations unrated Preussag went ahead with its Eu750m seven year issue. Priced at 89bp over the Bund, the deal quickly sold out as investors, predominantly in Germany, bought into the company's turnaround story. In the dollar sector, GECC sought to build an institutional investor base by launching a three-pronged increase to existing retail deals. Paribas was behind the strategy, which created three bonds of over $1bn - although some bankers questioned why GECC had not chosen to launch a new, jumbo bond instead. The IADB also launched a tap to an existing issue, in the yen sector, to create a ¥150bn bond which quickly traded through JGBs as investors in Europe and Asia sought scarce yen product. Morgan Stanley and TMI were bookrunners on the increase. Vodafone should launch a Eu1.5bn seven year fixed rate deal next week via Barclays Capital. A level of around Euribor plus 35bp equivalent is anticipated for the A2/A rated issuer. Northern Rock is planning to launch a Eu300 to Eu500m floater via lead managers HSBC and Lehman Brothers. The issue is being roadshowed in Europe this week and will have a three or five year maturity. Aguas de Barcelona, rated Aa3/AA-, has appointed Deutsche as books and Invercaixa joint lead for its debut Eurobond. The Eu500m 10 year issue will be roadshowed in Europe this month. Landesbank Rheinland-Pfalz has mandated Dresdner, Salomon and WestLB for a Eu1.5bn global Pfandbrief in the five year area. And Renault Credit International has mandated BNP for a three year euro floater. The cupboard of new issues in the dollar sector is relatively bare, with Freddie Mac having a clear run for its $4bn of three year reference notes next week. The US agency wants to increase European investor participation in its quarterly bullet bonds, and has appointed two European lead managers to run the deal - ABN Amro and Warburg Dillon Read. They will be joined as bookrunner by a sole US representative, Morgan Stanley. A new Japanese government guaranteed issuer, JBIC - the successor to Jexim - is said to be looking to launch an inaugural deal. A $1bn 10 year Eurodollar issue could emerge as a result. And Ford is taking soundings on a multi-billion dollar 10 year GlobLS issue.

Last week the Inter-American Development Bank (IADB) swapped a $1bn three year global to floating dollars at a level thought to be around Libor less 10bp. This week, it was a different story as it was able to add ¥150m to its 1.9% notes due 2009 and secure a negative interest rate. The notes were underwritten by JP Morgan and Morgan Stanley Dean Witter and priced flat to the 1.4% June 2009 JGB, which at the time yielded about 1.71%. Fees added 3bp. Swap bids were 2.12% indicating Libor less 38bp.

First time issuer Electronic Data Systems Corporation (EDS) attracted a staggering $9bn of orders this week for its $1.5bn first ever public debt offering as US investors, starved of supply, swamped the few new deals available. The global transaction, led by Merrill Lynch and Salomon Smith Barney, attracted more than 250 investors and was priced very close to the bid side of comparables with launch spreads of 94bp for a $500m five year tranche, 112.5bp for a $700m 10 year offering and 122bp for a $300m 30 year portion.

Crédit Foncier de France this week launched the first ever issue of obligations foncières, opening France’s new Pfandbrief style market and placing the new product closer to the massive German market than any other European mortgage bonds to date.

The Korean bank recovery story took a turn for the worse this week with the postponement of Korea Exchange Bank's $1bn GDR recapitalisation issue. The Morgan Stanley Dean Witter-led deal had been hanging in the balance since launch following a steep decline in the underlying stock in the wake of the Daewoo Group crisis.

German conglomerate Mannesmann this week posed the sternest test yet of the depth and maturity of the European convertible bond sector, launching a highly aggressive Eu2bn deal into a market where issuing conditions are far from favourable. Although the terms of the deal shocked some market participants, the jumbo bond was priced and allocated in the early hours of Friday morning - less than 48 hours after its launch - with all the signs indicating that the company and its bankers had pulled off an audacious piece of financing.

Exchange Fund Investment's landmark $1bn to $2bn Hong Kong equity offering began pre-marketing this week with an institutional roadshow set to begin on October 25. The government will officially announce the new index product - thought to be called the tracker fund of Hong Kong - on Monday, launching a media blitz that will run through to the close of the deal on November 5 with listing on November 8.