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** Supply was limited to one deal on Friday which came courtesy of Finnish real estate company Kojamo plc which printed a EUR500m 7yr at m/s +117 on the back of books around EUR1.4bn. For the pricing steps on this deal see IGM's DAILY NICS & BOOKS
** Kojamo's deal lifted the week's supply total to EUR27.635bn, up from the EUR22.22bn which printed last week. This week's issuance was boosted by jumbo deals from AT&T, Italy and Volkswagen. For a breakdown of this week's supply see the IGM WEEKLY VOLUME REPORT
** Corp paper increased to EUR11.5bn in the latest week, spearheaded by AT&T and Volkswagen which printed respective EUR7bn five-part senior, unsecured and EUR3.5bn two-part hybrid transactions on the back of total demand topping EUR27.5bn. The only other deals for the asset class this week were a EUR500m 10yr from HeidelbergCement on Monday and Friday's aforementioned deal from Kojamo. For some observations of this week's supply see IGM's CORP SNAPSHOT
** The only covered bond to print in the single currency this week was a EUR500m Oct 2023 Green Pfandbrief from Berlin Hyp which brought year to date supply from the asset class up to EUR71.45bn. For more on this and a look at stats and observations on the covered bond market, see IGM COVERED SNAPSHOT
** FIG issuers stayed away on Friday as UK bank stocks came under pressure following the UK election result, whilst Spanish Tier 2 paper also felt the strain as the dust continued to settle on Santander's acquisition of Banco Popular. For more on this and our performance tracker of recent FIG trades see the IGM FIG SNAPSHOT
** EPFR data for Euro-denominated IG bond funds shows investors put money in at the highest weekly rate since August 2016. Inflows totalled an eye-catching EUR2,783.34m in the w/e 7-Jun, following a blip the previous week where we saw outflows of -$114.04m, which had ended an eighteen-week winning run. For more see IGM's EPFR FUND FLOWS
IGM Credit Excel spreadsheets
** IGM European Weekly Credit Excel Spreadsheet is your comprehensive round-up of primary European new issue activity in Excel format, which allows users to conveniently download, save and edit the data as required. As well as new issue terms and conditions the spreadsheet incorporates additional data sets including distribution stats, book sizes, NICs and secondary market performance
** IGM/EPFR: Cheat Sheet provides proprietary intelligence on Euro primary market trends using various key data points in an easily digestible Excel spreadsheet. This includes Euro new issue volumes, average new issue concessions and book cover ratios across asset classes, as well as EPFR fund flow data and other key credit proxies
Friday's broader market developments
** UK election aftermath and reaction front and centre with cable dropping up to 2.48% but little impact seen on ex-UK markets
** EUR continued falling and synthetic credit markets pushed to new tights in wake of Thursday's ECB meeting where Draghi's rhetoric on inflation was dovish. Lower for longer still in play with big flows into Euro IG portfolios seen as underpinning credit
** Stocks mostly up too but IBEX underperforms as markets stay wary on weaker Spanish banks following midweek takeover of Banco Popular which saw junior bondholders wiped out. Liberbank's shares fell up to 37% Friday to make a 3-day fall of up to 52.8% while its T2 paper fell up to 12 points Friday
** Govvies - German yields edged higher but BTP yields dropped sharply as markets continued to adjust to a reduced chance of snap election. 10yr BTP yield dropped as much as 9.4 bps to follow 14.4bps drop Thursday
Market snapshot (15.35 BST)
SXXP +0.22% / SX7P +0.85%
GBP/USD -1.74% at 1.2731
GER 2yr +0.4bp at -0.743% / 10yr +1.5bp at 0.267%
Brent -0.19% at USD47.77
iTraxx Main -1.3 at 59.0 / Crossover -4.7 at 241.2
What to watch Monday and next week
** Data: French Business Sentiment is seen rising to its best level since May 2011 which comes as President Macron looks set to get a strong mandate at this weekend's National Assembly vote. Italian IP is expected to expand by 0.2% in April, half the rate seen in March
** Events: No significant events scheduled
** Supply: The US sells $24bn 3yr and $20bn reopened 10yr notes which precedes a 30yr UST sale on Tuesday as the Treasury looks to complete this month's refunding cycle ahead Wednesday's FOMC verdict where a 25bps hike is fully baked in
** VIEWPOINT: Week Ahead Fed expected to hike 25bp. BoJ/BoE set to leave policy steady. Inflation numbers due in the US/UK
FIG + Covered Priced / FIG + Covered Pipeline
IGM Credit
20 Feb 2020
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IGM Credit, IGM FX and Rates
18 Feb 2020
Inside this week’s edition of The Context, Financial Intelligence thought leaders discuss: The JPY Week - Bias is Bearish Has the impact of coronavirus now peaked? We say such talk is premature and an underlying bid Usd/Jpy will continue to slow into 110.00-plus. Euro FIG Snapshot: Virus Protection Fully Operational With the recovery in risk assets extending into a second week, more issuers emerging from blackout and the credit market's virus protection evidently up to date, the pace picked up in the non-covered primary FIG market last week. Equities Ignore, Hope … Euro Indicates Slowing EMU Economy It doesn’t take much to light a fire under equities, but it is going to take much more to push bond yields higher... Read more from The Context and subscribe to have it delivered to your inbox each week!
Topics Industry News
IGM Credit, IGM FX and Rates
By Tim Cheung 18 Feb 2020
The authorities, MOF, PBOC and CBIRC, hosted a joint conference on Feb 7 to provide an update on supportive policies in light of the coronavirus situation. We believe the conference delivered a loosening bias tone as a nimble response to the virus outbreak. Next move following the huge liquidity injection and provision of first batch of special relending funds to more than a dozen of banks is going to be an LPR cut on 20 Feb. We expect a 10bp cut in both 1-year and 5-year LPRs on 20 Feb (chart 1), similar to the magnitude of the latest OMO rate cut. A more sizable cut may mean the policymakers are opting for more aggressive monetary easing to cushion the economic shocks arising from the coronavirus outbreak.
Topics Industry News
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