IGM Credit, IGM FX and Rates
19 Oct 2020
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Monday's primary highlights
** It was a fairly modest start to the week for the European primary market on Monday where a total of EUR3.3bn IG issuance priced in the single currency courtesy of five tranches from four different issuers. For the breakdown of Monday's supply see IGM's DAILY EUR NICS & BOOKS
** The longer end of the credit curve remained popular with the average tenor of the day's five deals standing at 10.4yrs. This comes after longer issues dominated again last week where EUR14.885bn of the total EUR27.635bn issued came in the 10yr+ maturity bucket. For a roundup of last week's EUR issuance see IGM WEEKLY VOLUME
** The corporate sector was the busiest Monday where TenneT and Hemso Fastighets printed a respective EUR1bn Green 8/12yr two-part and a EUR300m 12yr trade. Demand for the paper was rather tepid, however, with the TenneT attracting combined books around EUR1.3bn (1.3x covered) and the Hemso deal seeing just EUR400m of demand (1.33x covered). For relative value analysis and our performance tracker or recent corporate deals see IGM's CORP SNAPSHOT
** In FIG, American International Group Inc (AIG) had the EUR market to itself. The borrower brought a EUR1bn SEC-registered 10yr line which landed at m/s +115 from a +130 area IPTs starting point. For the official comps list for the deal and some other broader FIG observations see the IGM FIG SNAPSHOT
** The ECB provided a CSPP update on Monday afternoon with the central bank revealing it held EUR92.127bn of corporate securities as of 9th June with the latest data pointing to an implied monthly purchase rate of EUR7.44, down from EUR7.47bn the previous week. For more see IGM's ECB CSPP REVIEW
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
Tuesday's primary prospects
** Skandinaviska Enskilda Banken AB (SEB) may pull the trigger on a new EUR 7yr Swedish covered issue after mandating BayernLB, Commerzbank, Credit Agricole CIB, SEB and UBS Investment Bank on Monday afternoon. The trade will be backed by 100% residential mortgages is expected to be rated Aaa by Moody's. See preview here
** Intesa Sanpaolo SpA is holding a Global investor call on Tuesday via Banca IMI, Credit Agricole CIB, HSBC, SG CIB for an inaugural EUR500m 5yr Green Bond which is expected to be rated Baa1/BBB-/BBB/BBBH
** CPPIB Capital Inc (Aaa/AAA/AAA), fully owned and guaranteed by the Canada Pension Plan Investment Board, is taking IoIs for a debut 7yr fixed-rated EUR issue at m/s +high single digits IPTs via Barclays, BNP Paribas, Deutsche Bank and HSBC
** The Federal State of Hesse (AA) has hired Commerzbank, DekaBank, Deutsche Bank, LBBW and UniCredit to lead manage a EUR500m no grow 7yr fixed-rate LSA.
** UNEDIC (Aa2/AA), the French unemployment insurance agency, has mandated BNP Paribas, Commerzbank and JP Morgan as joint lead manager for a tap its existing EUR2bn 0.625% March-2026 issue. The deal is explicitly, unconditionally and irrevocably guaranteed by the Republic of France.
** Kommunalbanken Norway (KBN), rated Aaa/AAA and 100% owned by the Kingdom of Norway, is taking IoIs for a USD Sep 2020 line at m/s +10 area IPTs via Daiwa Capital Markets, Deutsche Bank, J.P. Morgan, and TD Securities.
** Inter-American Development Bank (IADB), rated Aaa/AAA, is working a min USD500m 5yr Global floater at 3mL +7 area IPTs via BMO Capital Markets, Citi and Wells Fargo Securities
Monday's broader market developments
** EU risk assets traded mixed Monday with equities posting losses on the back of weaker tech stocks with AMS leading the decline as sector valuation concerns become more of a global concern, while synthetic credit indices tightened. Stoxx600 hits lowest level since 25th April
** Govvies - risk off tone underpins bunds, 10s-30s German and French curves bull flatten. 10yr German yield touches fresh 7-week low intraday while BTP equivalent hits lowest level since Jan as Italy's anti-EU M5S performs badly in local elections. OATs also outperform, 10yr yield trades sub-0.6% for the first time since November as Macron's En Marche party secured 32.3% of the vote in the first round of Parliamentary elections on Sunday
** iTraxx indices decouple from stocks, both Main and Crossover tighten, former hits fresh series tight
Market snapshot (15.31 BST)
SXXP -0.99% / SX7P -1.12%
GER 2yr +1.2bps at -0.739% / 10yr -0.4bp at 0.254%
BTP 10yr -6.5bps at 2.012%
Brent +1.62% at USD48.93
iTraxx Main -0.3 at 58.81 / Crossover -0.01 at 241.5
What to watch Tuesday
** Data: Final Spanish EU Harmonised CPI should match the flash print at 2% YoY, while both UK CPI and PPI YoY are seen steady in May. Away from inflation, the German ZEW Current Conditions and Expectations indices are forecast to pick up slightly in June.
** Events: Watching ECB's Weidmann (08.10) and BoE's Cleland (15.20)
** Supply: Netherlands to sell EUR2-3bn 2027 DSLs (09.15), and Italy EUR4.5-5.5bn 2020 and 2024 BTPs (10.00) before attention shifts to the USD12bn 30yr US bond auction (18.00)
IGM Credit, IGM FX and Rates
19 Oct 2020
Recall, we delivered the below predictions respectively in two issues of this publication last month: - 11 September -- "Despite the downward pullback of the yield in recent days, we still stick with our cautiously bearish view on the bonds. We won't be surprised if the 10-year CGB yield finally reaches 3.25% or higher in Q4 if the prevailing mini-deleveraging cycle continues". - 18 September -- "In our view, continued reluctance of PBOC to act generously will reinforce the market perception that monetary easing cycle is already over and borrowing costs will be gradually creeping upward. In case of that, there is a good chance we will see a strong selloff in bonds in October". Basically, both predictions have already materialized as 10-year CGB yield already reached as high as 3.23%, fresh high of the year, in the middle of this month (October). That's 11bp higher than September 18's closing level...
Topics Industry News