IGM Credit, IGM FX and Rates
19 Oct 2020
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Monday's primary highlights
** The primary market was quick out of the blocks Monday where EUR supply totalled EUR6.05bn, whilst there was also GBP925m worth of Sterling issuance. For the full list of EUR deals and a look at their pricing steps see IGM's DAILY EUR NICs & BOOKS
** After dominating proceedings last week, it was once again the corporate market which led the way on Monday, spearheaded by Daimler AG which took EUR4.05bn out of the market via a three-part fixed/floating rate transaction which attracted demand topping EUR5.65bn. Elsewhere a debut SEC-registered EUR/GBP three-tranche deal priced for Fidelity National Information Services, comprising EUR500m 3.5 & 7yr lines and a GBP 5yr Sterling issue. For more on these including relative value analysis, see IGM CORP SNAPSHOT
** In FIG, it was the turn of Nordea AB to bring its debut Green Bond following a roadshow held the prior week. The EUR500mn (no-grow) 5yr trade proved a very economic exercise for the borrower after the deal landed at m/s +18 (from +25 area IPTs), comfortably through fair value which leads pitched in the low 20s. Otherwise, sentiment was bolstered by the state backed wind-up of Banca Popolare di Vicenza and Veneto Banco, conducted under Italian law, which shielded senior creditors from losses. See IGM FIG SNAPSHOT
** After conducting investor meetings last week, Leeds Building Society refreshed its fledgling EUR covered curve on Monday with a new EUR500m 7yr UK regulated deal which landed at m/s +17 from a m/s +20 area starting point, resulting in a modest NIC of just 2bps. This follows hot on the heels of a successful foray from peer Nationwide Building Society which issued a three-times subscribed EUR1bn 15yr opportunistic UK covered bond last Thursday. For more see IGM's COVERED SNAPSHOT
** The ECB's latest CSPP data revealed that the central bank held EUR95.222bn of corporate securities as of 23rd June with the latest data pointing to an implied monthly purchase rate of EUR7.41bn. 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 market prospects
** The Kingdom Of Spain (Baa2/BBB+/BBB+/AL) has mandated Barclays, BBVA, Citi, Goldman Sachs International Bank, HSBC and Santander for a new Obligacion del Estado syndicated Oct 2027 EUR benchmark issue.
** KfW (Aaa/AAA/AAA) is readying a new EUR 7yr Global benchmark via Deutsche Bank, Goldman Sachs and NatWest.
** German State of Berlin (Aa1/AAA) has hired Deutsche Bank, DZ Bank, JP Morgan, LBBW and UniCredit to tap its EUR 1.375% Jun LSA issue
For a preview on all of the above SSA trades, see earlier SSA PREVIEW: Spain & KfW get primary back on track
** Bank of Queensland is expected to pull the trigger on a EUR500m no grow 5yr Conditional Pass Through Covered Bond via BNP Paribas, Commerzbank, ING, National Australia Bank and UBS Investment Bank. The issue is expected to be rated Aaa/AAA (Moody's/Fitch). For more including the official comps list, see IGM COVERED SNAPSHOT
Monday's Broader market developments
** European stocks move higher as markets warm to orderly wind up of Veneto banks
** Bunds and USTs diverge at the long end. Former held back by positive risk tone and record German Ifo while latter goes bid on weak US durable goods data
** 30yr US yields fall to new 2017 low
** iTraxx indices remain biased tighter - Main touches fresh series tight for 3rd straight day
** Multi-day oil recovery runs into resistance but options skew shifts to favour underlying price upside. See Viewpoint: Brent options skew shifts - sustainability wanted!
Market shapshot (15.35 BST)
SXXP +0.74%, FTSE MIB +1.56%
GER 2yr +0.8bp at -0.629% / 10yr -0.3bp at 0.249%
Brent -0.68% at USD45.23
iTraxx Main -0.1 at 53.5 / Crossover -1.2 at 233.3
What to watch Tuesday
** Data: Italian Manufacturing and Consumer Confidence data is unlikely to materially move markets. Ditto for US CoreLogic/Case-Shiller Home Prices and also US Consumer Confidence
** Events: The 3-day ECB Forum continues (until Wed) while Fed Chair Yellen headlines a quartet of Fed speakers
** Supply comes from Italy (up to EUR2.5bn 2019 CTZs and up to EUR1bn 2022/2026 linkers), Germany (EUR4bn 2018 Schatz), UK (GBP1bn 2026 linkers) and US (USD34bn 5yr notes)
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