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CORP WEEKLY: Issuers print but pay to play

It was a busy week for headline writers this week given a strong showing for the far right in the European elections, the announcement of a snap French election, as well as an FOMC meeting and a lower-than-expected US CPI print which all garnered plenty of attention.

In Europe, political uncertainty ensured that risk markets remained volatile and drove cash toward safer assets although it was notable that European IG corporate bond market remained fairly resilient and very much open for business.

Indeed, whilst the single currency non-covered FIG market saw its slowest week of 2024 with just one deal, corporates continued to churn out deals and maintain what has been a frenetic pace so far this year.

In fact, the final total of EUR9.85bn from 10 issuers (13 tranches) was more than the average guess of EUR8.5bn (EUR11bn highest) given by participants in our weekly issuance volume poll conducted before the escalation of political worries sparked by the last weekend's European elections.

Whilst issuance volumes remained strong, it was noticeable though that some issuers (not all) had to pay up to ensure a smooth execution of their deals amid the uncertain backdrop whilst investors also put up some resistance to tighter pricing levels.

Taking a top-line view and the average NIC paid this week crept up to 11.45bps from the prior week's 9.64bps, which also made it the highest weekly average of the year so far.

Combined demand for the EUR9.85bn paper peaked at an impressive EUR35.85bn but settled at a noticeably more measured EUR26.675bn after this week's issuers shaved an average 29.48bps from IPTs to reoffer.

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