DAILY CLOSE: EUR and GBP on the menu, pace still slow
** Earnings dominated the horizon on Tuesday and kept a lid on European primary bond activity, but we did at least see a few deals. In the single currency, financial borrower Mitsubishi HC Capital kicked off the week with a EUR500m 3yr senior unsecured line along with a small EUR75m Mar 2029 secured tap from HY name Kronos, whilst Inter-American Development Bank tapped an existing Dec 2029 sterling SDB for a further GBP250m, with full details in the respective IGM DAILY EUR NICS & BOOKS and IGM DAILY GBP NICS & BOOKS
** In non-covered FIG, making its third visit to the euro market of 2024 was Mitsubishi HC Capital Inc, through its UK arm Mitsubishi HC Capital UK PLC, via a EUR500m no grow 3yr fixed senior unsecured line. Leads shaved 30bps off m/s +105a IPTs to land the deal with a NIC in the region of 8bps after books totalled EUR1.25bn (EUR1.45bn peak), a weaker demand outcome compared to its prior EUR500m 3yr fixed sale in January which attracted a EUR2.75bn book. Away from primary, earnings remain a focus where the pace will hot up Wednesday as five members of the Stoxx banks index report comprising BNP Paribas, Deutsche Bank, UniCredit and Banco Santander. See IGM's FIG SNAPSHOT
** The SSA sector saw 2 mandates during the course of the European afternoon session with a deal apiece set to come in the euro and dollar markets (Wednesday) on top of Tuesday's GBP250m tap of IADB's Dec 2029 line (priced in line with IPTs at SONIA m/s+31, on orders that reached just GBP225m). Lining up German regional issuance (in LSA format) is Land Schleswig Holstein which is looking at a new 8yr line whilst Export Development Canada (EDC) are touting a new 4yr SONIA FRN at IPTs of SOFR +34a. The Canadian agency issuer has been active two times already this year in dollars, but hasn't conducted a deal in floating rate format in the currency since Nov 2016
** IG corporate names remained stuck to the side-lines Tuesday, but we are expecting to see some sterling activity at the very least on Wednesday. That as UK water company Severn Trent held calls on Tuesday ahead of a GBP 14yr senior unsecured sustainable notes offering which will be the first sterling IG corporate deal since back on 18-Jun and the first since the opposition Labour party won the UK general election on 4-Jul
** The latest CSPP update showed that the ECB's CSPP holdings fell by EUR801m to EUR303.357bn in the week to 19-Jul. The central bank also announced that holdings under its pandemic emergency purchase programme (PEPP) decreased by EUR4.427bn to put total holdings at EUR1,656.518bn
** The IGM European Weekly 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 other key credit proxies
Wednesday's primary prospects
SSA:
** The Federal State of Schleswig-Holstein (AAA) mandated Deutsche Bank, DZ BANK, Goldman Sachs Bank Europe SE, LBBW, and Rabobank to lead manage its upcoming EUR 8yr benchmark fixed rate Landesschatzanweisung
** Export Development Canada (Aaa /AAA) is working a debut USD 4yr SEC-registered Global SOFR FRN benchmark transaction at SONIA +34 area IPTs via BMO Capital Markets, HSBC, Scotiabank and Wells Fargo
Corp:
** Severn Trent hired BofA Securities, CIBC Capital Markets, Lloyds, RBC Capital Markets to conduct a series of investor calls on 23-Jul ahead a GBP 14yr senior unsecured sustainable notes offering issued by Severn Trent Utilities Finance PLC. The notes are expected to be rated Baa1 by Moody's, BBB+ by S&P, and A- by Fitch
** 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
** EU stocks struggled for direction as participants waded through a batch of corporate earnings. Standing out amongst Tuesday morning's earnings was German software company SAP which saw its share price rise up to 6.83% after announcing an AI-driven surge in cloud revenue growth. Big tech updates from Alphabet and Tesla were due later Tuesday
** Stoxx600 turned a loss of up to 0.24% into a rise of as much as 0.63%, but was on course to end the session virtually flat. Gains in Tech offset losses in Real Estate & Materials
** Govvies: EGB yields lower across the board on Tuesday, led Bunds with the GER 10yr falling as much as 6.1bps
** Data:
- EC Jul P Consumer Confidence beat at -13 (f/c -13.5, prev -14)
- US Jun Existing Home Sales missed at -5.4% (f/c -3.2%, prev -0.7%)
- US Jul Richmond Fed Manufacturing Index missed at -17 (f/c -7, prev -10)
What to watch Wednesday - PMIs and European bank earnings
** Key Data: JN Jul P Composite/Manufacturing/Services PMIs (01:30), GE Aug GfK Consumer Confidence (07:00), FR Jul P HCOB Composite/Manufacturing/Services PMIs (08:15), GE Jul P HCOB Composite/Manufacturing/Services PMIs (08:30), EC Jul P HCOB Composite/Manufacturing/Services PMIs (09:30), UK Jul P S&P Global Composite/Manufacturing/Services PMIs (09:30), US Weekly MBA Mortgage Applications (12:00), US Jul P Wholesale Inventories (13:30), US Jul P S&P Global Composite/Manufacturing/Services PMIs (14:45), US Jun New Home Sales (15:00)
** Key Events: ECB's Guindos (07:45) & Lane (13:00), and Fed's Bowman & Logan (both 21:05) speak
** Auctions: UK to sell GBP2.25bn 2054 Gilts (10:00), GE to sell EUR5bn 2034 Bunds (10:30) and US to sell USD30bn 2yr FRNs (16:30) & USD70bn 5yr Notes (18:00)
** Earnings: 44 Stoxx600 & 42 S&P500 companies release results. Former includes BNP Paribas, Deutsche Bank, Santander, SEB, and UniCredit
All times BST
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