IGM Credit, IGM FX and Rates
19 Oct 2020
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** Just one IG bond printed in the single currency on Friday in the form of a debut EUR500m 5yr senior unsecured Green issue from Intesa Sanpaolo. The sole HY visitor to the market was Intrum Justitia AB (publ) with a multi-tranche EUR/SEK issue. For more on these including pricing steps see the IGM DAILY EUR NICS & BOOKS
** Friday's two transactions brought total weekly issuance up to EUR16.75bn, falling sharply from EUR27.635bn the previous week with Thursday's Corpus Christi holiday coupled with significant headline event risk keeping volumes measured. For a breakdown of the week's issuance vols by asset class and some observations see the IGM WEEKLY VOLUME
** Intesa Sanpaolo SpA's EUR500m no grow Jun 2022 Green bond received an storming response from investors with final books of around EUR1.9bn allowing the borrower print the deal at m/s +83 from +95 area IPTs. That equated to some economic funding for Intesa at what appeared to be ca. 4bps inside fair value. The deal tightened by a further 7bps on the break. For more on this and another addition to the Green pipeline, see IGM's FIG SNAPSHOT
** Covered supply rose to EUR2bn in the latest week compared to just EUR500m the previous week, thanks to trades from Skandinaviska Enskilda Banken (SEB), Deutsche Hypothekenbank and La Banque Postale Home Loan SFH. For our weekly covered wrap including charts and stats, see the IGM COVERED SNAPSHOT
** IG Corporate borrowers stayed away for a second consecutive session Friday, keeping weekly supply from the asset class at EUR2.95bn compared to a much larger EUR11.5bn the week before. There also appeared to be a slight shift in pricing power with latest batch of deals seeing smaller average cover ratios and spread compression during execution. For some takeaways from this week's corp market, see IGM's CORP SNAPSHOT
** EPFR data for Euro-denominated IG bond funds shows investors put money in during the w/e 14th June, to the tune of an equivalent $1,545.19m, although the pace of inflows slowed from $2,783.34m the previous week which had marked the largest single weekly inflow since August 2016. For more see IGM/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
** EU risk assets stabilise following risk off tone Thursday, which had seen Stoxx600 near a 2-month low
** Govvies - 10-30s German curve bear steepens as haven appeal ebbs. EGB yields rise almost across the board for the second consecutive day, Gilts an exception though as curve bull steepens
** Brent rebounds, recovering all of Thursday's 0.17% decline and more, but was on course to close below USD50 for the 8th session in a row
** iTraxx indices back on tightening path after brief blip Thursday - both were off session tights in afternoon trade, however
Market snapshot (14.26 BST)
SXXP +0.53% / SX7P -0.04%
GER 2yr +0.2 at -0.664% / 10yr flat at 0.279%
Brent +1.11% at USD47.44
iTraxx Main -0.0 at 57.3 / Crossover -0.9 at 238.1
What to watch Monday
** Data: Light agenda. UK reports Rightmove House Prices for June. No top tier US data.
** Events: The 2nd round of the French Parliamentary election (Sunday) should confirm Macron's dominance in the National Assembly. Brexit Secretary, David Davis, will be in Brussels (Monday) to begin Brexit talks. Across the pond, watching Fed's Dudley (13.00)
** Supply: Belgium to sell EUR2.7-3.2bn 2024, 2027 and 2047 bonds
** Viewpoint: Week Ahead - Plenty of Fed speak and Brexit talks finally begin � as EU leaders meet.
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