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Tuesday's primary market highlights

** Euro IG/split rated issuance totalled EUR8bn courtesy of 6 separate tranches on Tuesday, bringing the week's supply up to EUR13.8bn in the first 2 days of the week which is just shy of the EUR14.095bn which printed in the whole of last week. For a breakdown of Tuesday's EUR deals see the IGM DAILY EUR NICS & BOOKS

** Kingdom of Belgium spearheaded supply with an equally weighted EUR6bn dual tranche OLO transaction which was made up of a EUR3bn long 7yr (Oct 2024) and a EUR3bn long 40yr (Jun 2057). Demand for the tranches was a blowout at over EUR7.7bn and EUR12.5bn respectively. See earlier SSA PREVIEW for relative value analysis of the deal

** In FIG, tier 2 supply was back on the agenda as CaixaBank S.A. priced a EUR1bn 10NC5 at m/s +335 (from +340 area IPTs) on demand topping EUR2bn. Among recent deals, most paper tightened compared to Monday's levels but French paper remained better offered, reflecting heightened political concerns. See IGM's FIG SNAPSHOT

** Sparebanken Vest Boligkreditt kept EUR covered supply ticking over with a EUR500m 7yr Norwegian residential mortgage covered bond which landed at m/s +3bp, from initial guidance of m/s +6 area on the back of investor interest at over EUR1bn. See IGM's COVERED SNAPSHOT for analysis on the transaction and our performance tracker of recent deals

** Corporate supply drew a blank on Tuesday, leaving us with just Monday's well-received EUR500m 8yr line from Swedish borrower Molnlycke Holding AB. For a more in depth look at this deal see Tuesday's CORP SNAPSHOT

** One issuer which didn't find markets receptive on the day was Agence Francaise de Developpement (AFD) which pulled its planned USD1bn no grow 3yr line during bookbuilding. Elsewhere, EIB did manage to get over its USD3bn 3yr exercise over the line, while BNG is hoping to be the next SSA issuer out of the blocks having mandated a USD 2yr deal. For more details see IGM's SSA PREVIEW

Wednesday's potential primary supply

** Republic of Finland is set to follow hot on the heels of Belgium with a dual-tranche Euro issue of its own. The sovereign has mandated BNP Paribas, BofA Merrill Lynch, Citi, JP Morgan and Nordea to lead manage a new 5yr (April 2022) and 30yr (April 2047) transaction

** F. van Lanschot Bankiers N.V. could pull the trigger on a new EUR500m no grow 10yr Conditional Pass-Through Covered Bond (CPTCB) after hiring BNP Paribas, Credit Suisse, ING, LBBW and Rabobank on Tuesday afternoon

** More short dated Dollar SSA supply could be on the way as noted above with Bank Nederlandse Gemeenten (BNG) taking IoIs for a USD 2yr (Feb 2019) line at m/s +13 area IPTs via BMO, BNP Paribas, Goldman Sachs and Nomura


Tuesday's broader market developments

** Global risk markets selectively recovered (Dow hit record high) while FI havens (USTs/Bunds/Gilts) ran into resistance

** The alarming divergence between bunds and OATs/BTPs/SPGBs that characterized Monday's session abated

** Euro stocks were led higher by real estate while oil & gas and banks fell - latter weighed by drop in BNP Paribas following disappointing earnings update

** Data wise: German Industrial Production slumped by 3.0% MoM in Dec (exp 0.3%) but little reaction seen

** iTraxx indices traded sideways following lurch wider seen Monday

** DXY was on course for 5th straight rise as EUR extended recent decline

Market snapshot (15.50 GMT)

EUR/USD -0.63% at 1.0683

SXXP +0.48% / SX7P -0.54%

GER 2yr -0.9bps at -0.794% / 10yr -0.4bps at 0.361%

FRA 10yr -3.6bps at 1.097%, ITA 10yr -4.1bps 2.317%

Brent -1.33% at USD54.98

iTraxx Main +0.2 at 75.5 / Crossover +0.6 at 302.1


Event risk to watch Wednesday

** Data: There's not much to get in the way of a go/no go call on Wednesday with data limited to second tier releases in the form of France's BdF Business Sentiment indicator and Spain's Industrial Output. Both are forecast a tad softer

** Events: BoE's Cunliffe is the only central banker scheduled to speak on the day

** Supply comes from Germany (EUR3bn 2027 bonds), Portugal (EUR1-1.25bn 2022 & 2024 PGBs) and the US (USD23bn 10-yr Notes)

** Earnings: 23 Stoxx600 and 16 S&P500 companies report

SSA Priced / SSA Pipeline

CORP Priced / CORP Pipeline

FIG + Covered Priced / FIG + Covered Pipeline


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