02 Feb 2018
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Primary market highlights on Monday
** It was a more measured start to the week for the European primary market where EUR4.75bn of paper was printed in the single currency via 5 tranches. See IGM's DAILY EUR NICS & BOOKS Report for a breakdown
** The covered bond market was most active on the day with three deals pricing courtesy of DBS Bank, Nordea Mortgage Bank and Banque Postale SFH for a combined EUR2.75bn, bringing total year-to-date supply up to EUR21.25bn for the asset class. For more on the latest trio of deals, including fair value, see IGM's COVERED SNAPSHOT
** Deutsche Bank AG hit the screens on Monday, issuing its first Euro senior deal since last March. The Jan 2022 line attracted books of around EUR2.5bn which allowed the borrower to tighten pricing 15bps from IPTs. See IGM's FIG SNAPSHOT
** The sole corporate in the market was German residential real estate company LEG Immobilien AG which printed a debut EUR500m no grow 8yr line at m/s +102. Please see IGM's CORP SNAPSHOT for more
** The ECB released its latest CSPP update with the central bank revealing it holds EUR54.010bn of corporate securities as of 13th Jan. The latest data implies a monthly run rate of EUR7.3bn which is slightly up from last week. For more see IGM's ECB CSPP REVIEW
Tuesday's primary supply prospects
** The Kingdom of Belgium (Aa3/AA/AA-) is set to launch a EUR Jun 2027 benchmark (OLO 81) having mandated BNP Paribas Fortis, Citi, Cr�dit Agricole CIB and ING as joint bookrunners on Monday. See IGM SSA Preview for more background and RV
** The Republic of Slovenia (Baa3/A/A-) is lining up a new EUR 10yr benchmark (22-Mar-2027) and a re-opening of its 3.125% line due 07-Aug-2045. Bookrunners are Abanka, Barclays, Credit Agricole CIB, HSBC and UniCredit.
** DVB Bank (A2/A+) is taking IoIs for a EUR500m no grow Apr 2022 senior at m/s +high 90s IPTs via Banca IMI, DZ Bank, Deutsche Bank, Raiffeisen Bank International and UniCredit. See IGM FIG Preview for more background and RV
** Corporacion Andina de Fomento (CAF), rated Aa3/AA-/AA,- is considering a Euro benchmark with a 5-7 year maturity via BNP Paribas, Citi and HSBC
** German health care company Fresenius SE & Co. KGaA (Baa3/BBB-/BBB-) is eyeing a EUR multi-tranche issue having concluded investor roadshows on Friday. The target issue size remains EUR2.6bn, made up of 5-10 year tranches of benchmark size and a potential EUR300mm 15 year. For more details, including a comprehensive comps list, see earlier IGM Corp Preview
** Unrated French transportation company Bollore could also hit the screens in the near future with a 5-6 year EUR benchmark via Credit Agricole CIB, HSBC, ING, Natixis and SG CIB after also holding an investor roadshow last week.
Broader market developments on Monday
European risk assets were on the back foot Monday as markets fall into the shadow of this week's looming risk events, see IGM's Risk Watch for details. US out for Martin Luther King Holiday
'Hard Brexit' jitters continue to weigh on GBP/USD, which slumped to its weakest level since 7th Oct in the early hours, tumbling over 1.5% to sub-1.2000 ahead of Tues speech from UK PM May when she should detail her Brexit approach
Spot gold receives safe-haven lift, hitting its highest level since 23rd Nov 2016
Risk-off in equities also inspires govvie bulls with Gilts leading the charge. BTPs buck the trend however after rating agency DBRS downgraded Italy late on Friday to BBB (high) from A (low). BTP price action also comes amid speculation of a new long-dated syndicated deal from the sovereign
iTraxx indices sea-sawed in the red, but ultimately respect Fri's ranges
Market snapshot (15.23)
SXXP -0.72% / SX7P -1.42% / FTSE100 -0.19%
GER 2yr -2.0bps / 10yr -1.9bps
Brent -0.14% at USD55.37 / Spot gold+0.62% at 1203.95
iTraxx Main +0.91 at 69.5 / Crossover +3.1 at 290.9
What to watch Tuesday
** Data: UK inflation will be in the spotlight followed by German ZEW sentiment indicators, before US reports Empire Manufacturing
** Events: Focus on UK PM May's speech setting out her approach to Brexit. Also watching speeches from Fed's Dudley and Williams, latter due after EU hours, while the ECB publishes its latest Bank Lending Survey
Ahead of UK PM May's speech, our strategy and technical team put out a viewpoint (Viewpoint: May The (Brexit) Force Be With You!). The main thrust of their thoughts being;
1) Affirmation of a March trigger on Article 50 is a given
2) Expect little to be given away in terms of negotiation stance, leaving Cable a "sell on rallies"
3) A break below 1.1841 on Cable (post-Brexit low) risks a rapid test of 1.15
** Supply: Germany auctions up to EUR5bn of 2018 bonds. Watch out for any concession beforehand
IGM FX and Rates
By Marcus Dewsnap 09 Apr 2018
Welcome to our newsletter, The Context, from IFI Research, containing thought leadership articles spanning a host of asset classes.