24th June 2025

Several major international financial institutions announced mandates to tap the USD market yesterday and given overnight developments (a tentative Israel / Iran ceasefire) will do so today into a much more positive backdrop than the one they perhaps envisaged. Stocks are rallying and while yields on government bonds opened lower, moves have already been pared. Meanwhile, European issuers who mandated yesterday did so for deals with a range of sustainable financing options including Slovenia which will bring the European Union's first sovereign Sustainability-Linked Bond (SLB).

Corporacion Andina de Fomento (CAF), International Finance Corporation (IFC), and Japan Bank for International Cooperation (JBIC) are all in line to launch dollar-denominated offerings with maturities ranging from 2028 to 2030. Meanwhile, the Kingdom of Denmark is also entering the dollar market with a 2yr offering with IPTs at T+7 area. IOIs for all of these deals have been circulated this morning with values ranging between USD2bn to USD3.7bn, with CAF the issuer landing at the top end of that range and since extending its tally to an exceptionally robust looking USD5.5bn. Expected deal sizes from the 3 non-sovereign issuers extend from USD1bn for CAF and JBIC (with no grow approaches already announced) to as much as USD2bn for IFC (its last three 5yr deals have all been USD2bn). On that note, CAF (USD1bn 3yr) looks like it will be inundated with orders for its size, JBIC (USD1bn 3yr) is comfortably covered but IFC (5yr) could arguably do with some additional numbers in the book to firm up the final cover ratio. Indeed, the guidance being maintained at SOFR m/s+42 for the IFC 5yr points to a willingness to print at a size near to the book communicated in the IOI announcement. Whereas, in contrast, JBIC felt able to squeeze pricing by 2bp from SOFR m/s+48a to +46a with a similar USD2bn IOI being communicated.

In Europe, Bpifrance Financement is bringing a benchmark 8yr (July-2033) Social Bond to the market. An early update suggests EUR3.3bn of orders in the book with the spread being set at OAT+18 versus OAT+21a IPTs. There appears to be a more pragmatic pricing and investor response to French agency deals at present, following months upon months of examples where pricing was pitched 5-6bp back (at least) and deals benefitted from huge oversubscription rates. Bpifrance itself was on the receiving end of EUR17.8bn and EUR15bn order books for EUR1bn 10yr and EUR1.25bn 8yr deals in mid 2023 and 2024 respectively. Since that date there have been growing signs of book attrition (some price sensitivity from investors) and barring a EUR12bn order book (6.67x cover) for a new 7yr in Jan 2025 there is evidence of oversubscription rates beginning to 'normalise' (i.e. fall back down in line with broader SSA averages).

Meanwhile, the Republic of Slovenia is preparing a 10yr SLB with ambitious greenhouse gas reduction targets. Slovenia's innovative structure includes both step-up and step-down features tied to emission reduction achievements, reflecting a growing sophistication in the ESG bond market for SSAs.

On an opportunistic basis, China Development Bank has emerged with a 3yr Fixed / 3yr FRN dual-tranche deal across EUR and USD and in a strange twist of fate the Republic of Chile, one of the major sovereign proponents of both Social and SLB issuance in recent years, is out with a new transaction too. However, in contrast to its recent modus operandi it is coming with a vanilla 10yr deal, in what will be its first non-ESG labelled bond (taps excluded) in euros since January 2018.

EU announces 2H25 funding requirements

• The European Commission intends to issue EUR70bn of EU-Bonds between July and December 2025 (compared to the EUR90bn target for the first half of the year - and fitting with the EUR160bn expected for FY2025).
• The Commission has planned six EU-Bonds auctions and four syndicated transactions between July and December 2025.
• The funds raised will be used to meet payments related to NextGenerationEU and other policy programmes financed by EU-Bonds (including support to Ukraine, the Reform and Growth Facility for the Western Balkans and Macro Financial Assistance programmes).
• EU-Bonds will continue to be issued using benchmark maturities from 3 to 30 years, with tap transactions and new lines, using auctions and syndications. The maturities for the new lines will depend on market conditions and the intention to bring liquidity to the curve where needed (with a preliminary focus on 5yr, 7yr, 15yr and 30yr.

Live Deals

Priced last week

• For the full report in the original PDF format click here: SSA Weekly - 20th June 2025
• The SSA primary market saw overwhelming investor demand, resulting in massive oversubscription levels (the EU's tap was 18.6x covered) and allowing issuers to significantly tighten pricing from initial guidance, with little to no new issue concession.

  High-quality issuers like the European Union, Kingdom of Sweden, and EIB led the charge with heavily oversubscribed deals, while the robust demand extended across the credit spectrum, enabling EM issuer the Republic of Hungary to achieve dramatic spread compression of 30-40bp on their USD offerings.