DAILY CLOSE: 2025 has arrived!

** The week may have started with a single currency blank amid the Epiphany Day holiday, but the floodgates well and truly opened on Tuesday with no fewer than 27 separate euro tranches pricing, the joint-third most of any day on record. They totalled a combined EUR36.75bn, in turn also making it the third biggest euro volume day in history. SSA heavyweights KfW (EUR9bn) and Belgium (EUR7bn) did the heavy lifting in terms of volumes, but the non-covered FIG sector dominated deal numbers with no fewer than eleven names printing in the single currency on the day. IG corporate names also got the ball rolling for 2025, with full details of all Tuesday’s single currency trades in the IGM DAILY EUR NICS & BOOKS. Complimenting the swathe of euro deals on the day we had another glut of USD and GBP supply, whilst the pipeline continued to swell (details below) ahead of what is shaping up to be another frenetic session on Wednesday. Giving the next batch of euro issuers encouragement will be the huge demand seen for Tuesday's trades, where combined orders for the EUR36.65bn of paper peaked at an eye-watering EUR259bn

** Tuesday was a day to behold in the SSA market with a smorgasbord of deals on offer in each of the three major issuance currencies (and elsewhere too). Issuers appear to have been greeted by investors with open arms and even deeper pockets with it difficult to say yet whether any particular currency or tenors fared best such was the level of excess demand witnessed across the board. That's hardly a new phenomenon for transactions in the early January period but does at least bode well for the queue of issuers entering the pipeline (Italy, EIB, ADB, JFM and Land NRW in euros and CoE, IADB, KBN, ONT in dollars) quicker than deals are being printed. It is hard to look past the Kingdom of Belgium (EUR7bn 10yr) and KfW (dual tranche EUR6bn long 3yr / EUR3bn 10yr) for the highlights of the day in the euro market with the former garnering interest that surpassed EUR89bn. Meanwhile, the latter opted for the dual tranche approach to kickstart euro issuance for the second year running (even with the same tenors) and in the process attracted a combined EUR85bn order book with a small preference for the longer line (15.17x covered). Away from those euro activity was limited to EM sovereigns in the shape of the Republic's of Chile, Hungary and Slovenia. Each saw exemplary levels of demand with Hungary perhaps the standout as its dual tranche (long 9yr and 15yr green) saw combined interest greater than EUR10bn. In the dollar space order books were eye-catching from EIB (USD6bn 5yr conventional), ADB (USD5bn 3yr) and World Bank IBRD (USD6bn 7yr sustainability) with the USD17bn of new paper met with combined demand that pulled up just short of USD60bn. Notably, over half of that figure was attributable to the EIB's 5yr deal with the USD31bn appearing to be a record for the issuer in USD (equally the USD16bn recorded against the ADB 3yr was also an issuer record). Each of the trio were also able to slash pricing by 3bp from IPTs to reoffer leaving limited NICs. See IGM's SSA SNAPSHOT

** In non-covered FIG, a football team’s worth of issuers rushed the pitch to raise a collective EUR8.7bn in euros on combined books last seen at EUR32.66bn via deals which spanned the full capital structure. Abundant demand delivered keenly priced funding too where several deals priced either flat to fair value or through existing curves. Seeing the day’s biggest demand was BPCE’s EUR750m 10.5NC5.5 Tier 2 (bks EUR6.2bn) while the sharpest price was achieved by Societe Generale’s EUR1bn 6.5NC5.5 social SNP (NIC -3). Tuesday’s euro sales also put a massive dent in this week’s anticipated supply which was guesstimated at EUR14bn in our weekly survey, a figure which looks easily achievable given the overt imbalance between buyers and sellers. Away from the single currency, two more hit GBP in the form Barclays PLC (GBP750m long 7NC6 senior HoldCo; bks GBP1.25bn) and Bank of Nova Scotia (GBP350m 4NC3 senior; bks GBP495m) to mop up spare demand from Monday’s brace of trades. See IGM’s FIG SNAPSHOT

** The IG corporate bond market was slower than other sectors to get underway in the new year, but we are certainly up and running now with six names printing nine tranches worth EUR6.85bn Tuesday and making a big dent in the average weekly estimate of EUR10.5bn. It is usual for automakers to be amongst those to kick off the year’s euro IG/split-rated corporate bond activity and in 2025 it was no different as three came out including RCI Banque (EUR850m 3yr; 3.9bn bk & 7bp NIC) which has now opened up supply in eight straight years. RCI was joined by automaker peers General Motors Financial Company (EUR850m 6.5yr; 2.9bn bk & 3bp NIC) and TRATON (EUR700m 3yr / 500m 6yr two-part; jt-bks 5.4bn & 5/8bp NICs), whilst making up Tuesday’s sextet of corporate names were Nestle (EUR600m 7yr / 500m 10yr two-part; jt-bks 4.9bn & 2/2.5bp NICs), Digital Dutch Finco (EUR850m long 10yr; 2.3bn bk & -2bp NIC) and Enel (EUR1bn PNC5.25 / 1bn PNC8 two-part hybrid; jt-bks EUR4.2bn), with the latter printing the first corp hybrids of the year flat to or inside fair value estimations at the cost of a few orders that earlier peaked at a combined EUR7.15bn. More supply is expected Wednesday with German pair Evonik (EUR500m no grow 5yr green) and Lufthansa (EUR 30NC6 hybrid) having conducted investor calls Tuesday, as did La Poste (EUR PNC6.5 hybrid). See the IGM CORP SNAPSHOT

Wednesday's primary prospects

SSA:

** The Republic of Italy (Baa3/BBB/BBB/BBBH/BBB+) hired Banca Monte dei Paschi di Siena, BNP PARIBAS, Citi, Credit Agricole CIB, NatWest Markets and UniCredit as Joint Lead Managers for a dual tranche new EUR 10yr (Aug 2035) benchmark and new EUR5bn no grow 20yr (Apr 2046) green

** The European Investment Bank (Aaa/AAA/AAA) asked BNP Paribas, JP Morgan, Morgan Stanley and Natixis to lead manage a new EUR 10yr Climate Awareness EARN benchmark

** The Asian Development Bank (Aaa/AAA/AAA) has mandated Credit Agricole CIB, Deutsche Bank, Goldman Sachs International and Nomura to lead manage a new EUR 7yr fixed rate benchmark

** The German State of North Rhine-Westphalia (Aa1/AA/AAA/AAA) hired Barclays, DekaBank, Deutsche Bank, Goldman Sachs Bank Europe SE, NatWest Markets, and Nomura to lead manage its upcoming dual-tranche issuance of a EUR 5yr benchmark and a EUR1bn no grow tap of its 3% Mar 2054 notes

** Japan Finance Organization for Municipalities (A1/A+) mandated J.P Morgan, BofA, Mizuho, and Morgan Stanley to lead its forthcoming senior unsecured EUR500m no grow 5yr fixed rate green bond. IoIs being taken at m/s +49 area IPTs

** Kommunalbanken Norway (Aaa/AAA) hired Daiwa Capital Markets, J.P. Morgan, Nomura, and RBC Capital Markets to lead manage a new USD 5yr benchmark Regs/144A transaction. IPTs are SOFR m/s +51 area

** Province of Ontario (Aa3/AA-/AA-/AA) is working a USD 5yr global benchmark at SOFR m/s +60 area IPTs via BofA, HSBC, NBCFM and TD

** Council of Europe Development Bank (Aaa/AAA/AAA) is taking IoIs for a USD 5yr global benchmark at SOFR m/s +45 area IPTs via Goldman Sachs Bank Europe SE. HSBC. JP Morgan and TD Securities

** Inter-American Development Bank (Aaa/AAA) has mandated BofA, BMO, Citi and WFS as Leads for a USD Feb 2030 benchmark Global (SEC Exempt) sustainable development bond. IPTs are SOFR m/s +45 area

** Nordic Investment Bank (Aaa/AAA) is working a GBP 3yr senior unsecured benchmark at SONIA m/s +33 area IPTs via BofA, Nomura and RBCCM as Joint Bookrunners

Corp:

** German chemicals company Evonik Industries AG (Baa2/BBB+) mandated J.P. Morgan as Sole Global Coordinator and Citi, Helaba, HSBC, J.P. Morgan and Societe Generale as Joint Bookrunners to arrange a series of fixed-income investor calls on 7-Jan. A EUR500m no grow 5yr green bond may follow. The net proceeds of the potential bond offering will be used for financing and/or refinancing, in whole or in part, existing and/or future Eligible Green Projects in accordance with Evonik’s Green Finance Framework

** German airline Deutsche Lufthansa Aktiengesellschaft (Baa3/BBB-/BBB-) hired Citigroup, HSBC and J.P. Morgan as Joint Global Coordinators and Citigroup, Credit Agricole CIB, HSBC, J.P. Morgan, Morgan Stanley, Societe Generale and UniCredit as Joint Bookrunners, to arrange a series of fixed income investor calls on 7-Jan. A EUR benchmark 30NC6 hybrid offering will follow. The notes are expected to be rated Ba1/BB/BB by Moody’s/S&P/Fitch. The use of proceeds of the new issue is for general corporate purposes including the refinancing of the existing EUR500m Subordinated Resettable Fixed Rate Notes due 2075 callable as from 12 Feb 2026. Comps here

** French Postal service company La Poste (A/A+) mandated BNP Paribas, Deutsche Bank and NatWest Markets as Structuring Advisors and Global Coordinators, and Barclays, BNP Paribas, Deutsche Bank, NatWest Markets and Societe Generale as Joint Bookrunners to arrange a series of fixed income investor calls beginning 7-Jan. A EUR PNC6.5 benchmark size issuance hybrid capital securities (expected instrument rating: BB+/BBB+ by S&P and Fitch) will follow. La Poste will also conduct a tender offer for their existing EUR750m hybrid callable in Oct 2025

Covered:

** Credit Agricole Italia SpA mandated Credit Agricole CIB as Global Coordinator and BBVA, Credit Agricole CIB, LBBW, Mediobanca, Natixis, Raiffeisen Bank International and UniCredit as Joint Bookrunners to lead manage its forthcoming EUR750mn expected Feb 2034 (9yr) soft-bullet Obbligazioni Bancarie Garantite - European Covered Bond (Premium). The covered bonds are backed by 100% Italian residential mortgages and are expected to be rated Aa3 by Moody's. The covered bonds are expected to be ECB Eligible, LCR Level 1, beneficial treatment under CRR Art.129 and Solvency II and is ECBC Covered Bond Label Compliant. The transaction will be launched and priced in the near future subject to market

** LBBW mandated DZ BANK, Erste Group, LBBW, Rabobank and TD Securities as Joint Bookrunners for its upcoming EUR 5yr (Feb 2030) benchmark Mortgage Covered Bond (Hypothekenpfandbrief). The transaction is expected to be rated Aaa (Moody’s)

** The IGM Roadshow Calendar is your one stop window on who, when and where. The calendar view provides an instant snapshot of which days are already earmarked for meetings in a convenient PDF format, with clickable links that take you directly to the known schedule

Tuesday's broader market developments

** European stocks saw early gains fade Tuesday despite mixed pictures emerging from the the day's key data points on the inflation front and strong US data. Eurozone CPI was on the money in December, with the headline coming at 2.4% YoY (+20bp versus November) and the core steady at 2.7% YoY. After upside surprises from Germany and Spain, France and Italy seemed to have offset somewhat. For the core, the ECB has pencilled in 2.8% over Q4. It has been 2.7% YoY since September and hence suggests a marginal undershoot versus the ECB's forecasts (See EMU CPI on the money from our economic analysts). Sticking with the inflation theme 1yr and 3yr ECB CPI expectations were marked higher to 2.6% and 2.4% respectively (from 2.5% and 2.1% prev) but with the upshot that the current projected rate cut path is still very much intact. In the US, stronger than expected ISM Services Index and JOLTS Job Openings saw yields spike and stocks pull back with speculation that the Fed will leave rates unchanged gathering momentum

** Stoxx600 rose as much as 0.51%, with Tech stocks having led a broad-based advance. Gains pared in late trade though

** Govvies: EGB yield curves continued to steepen on the day with yields jumping across the board in wake of strong US data

** Data:

• FR Dec P CPI lower than exp at 1.3% YoY (f/c 1.5%, prev 1.3%)
• ECB Nov 1yr/3yr CPI Expectations both higher than previous at 2.6% / 2.4% (prev 2.5% / 2.1%)
• IT Nov Unemployment Rate lower than f/c at 5.7% (exp & prev 5.8%)
• UK Dec S&P Global Construction PMI lower than f/c at 53.3 (exp 54.4, prev 55.2)
• IT Dec P CPI EU Harmonized lower than f/c at 1.4% (exp 1.6%, prev 1.5%)
• EC Dec P CPI Core in line at 2.7%
• US Nov JOLTS Job Openings bigger than exp at 8098k (f/c 7740l, prev rev 7839k)
• US Dec ISM Services Index higher than exp at 54.1 (f/c 53.5, prev 52.1)

What to watch Wednesday – FOMC minutes & US jobs data

** Key Data: GE Nov Retail Sales (07:00), GE Nov Factory Orders (07:00), FR Dec Consumer Confidence (07:45), EC Dec Economic/Industrial/Services Confidence (10:00), EC Nov PPI (10:00), US weekly MBA Mortgage Applications (12:00), US Dec ADP Employment Change (13:15) and US Weekly Initial/Continuing Jobless Claims (13:30)

** Key Events: Fed’s Waller (13:30) and ECB’s Villeroy (17:30) speak, FOMC Dec Meeting Minutes (19:00)

** Auctions: UK to sell GBP4.25bn 2030 Gilts (10:00), GE to sell EUR5bn 2035 Bunds (10:30) and US to sell USD22bn 30yr Bonds (18:00)

All times GMT

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