DAILY CLOSE: EUR10bn to kick off the week, EU stands out in bustling pipeline
** Broader risk markets remained on the backfoot at the start of the new week amid a renewed paring back in Fed rate-cut bets, but that failed to stop the primary juggernaut. Having seen the second highest euro volume week ever last week at EUR101.7bn, all asset classes contributed to a EUR10.05bn total on Monday and kicked off a week that is expected to yield an average EUR71.5bn of single currency paper – with the full breakdown in the IGM DAILY EUR NICS & BOOKS. We look set to get a lot closer to that average estimate on Tuesday with the public pipeline already bursting at the seams (see below), with the European Union’s latest syndicated lines to be the volume booster
** This week's SSA issuance landscape is poised for a slight slowdown following last week's high volume, which reached EUR55.75bn (excluding EM sovereigns). Estimates for the current week averaged out at EUR38.5bn, with a range from EUR20bn to EUR65bn, reflecting varied expectations among market participants. While past issuance trends in comparable periods show considerable volatility, with EUR72.35bn followed by EUR26.35bn last year in weeks #2 and #3, interpretations differ on whether this week (#3) will see a significant slowdown or continued robust activity. Notably, major issuers like Spain, Austria, France, Germany, EFSF, and ESM have yet to enter the market, potentially influencing total issuance. The EU's upcoming issuance of a new long 3yr benchmark and a tap of the 3.375% Oct-2054 signifies its continued shift away from 'jumbo' deals to focus more on liquidity. Monday's market activity was modest, with notable interest for Agence Francaise de Developpement's new EUR2bn 10yr sustainability (EUR6.7bn order book) and Saarland's heavily oversubscribed EUR500m 10yr issuance at m/s+42. The German regional issuer (the smallest barring the city states) came with a starting pick-up over KfW of 10bp at IPTs of m/s+44 and that likely helped its reception. NWB Bank and Quebec were in the sterling market with the former bringing a new 3yr in line with IPTs of SONIA m/s+43a, after BNG Bank landed a 3yr at +42 just last week (that has since tightened by 3-4bp) whilst the latter took advantage of a GBP1.1bn order book to print a GBP750m 5yr. Dollar transactions were mandated from very early in the session for Wednesday's business with notable upcoming deals from BNG Bank N.V, CADES, KfW, International Finance Corporation, Corporacion Andina de Fomento and British Columbia highlighting a continued preference for USD markets early in the year. Africa Finance Corp's hybrid transaction (PNC5.25) is an eye-catcher with nearly a year since AfDB's trailblazing effort that the first ever SSA hybrid (PNC10.5) priced at a 5.75% yield. The AFRFIN deal communicated IPTs at 8% and later finalised at 7.625%, printing an expected USD400m into orders of USD1.1bn. There is a sizable rating differential to take into account here with expected bond ratings at Baa3 (Moody's), 3 notches below the Africa Finance Corp's issuer rating of A3 which in turn is 6 notches below the AfDB issuer rating of Aaa at Moody's. See IGM's SSA SNAPSHOT
** A duo of IG corporates tapped the market Monday in the form of EDP (EUR750m, from benchmark 6.5yr green) and LEG Immobilien (EUR300m no grow 10yr). The former stole the show where its latest green offering amassed blowout demand of EUR3.7bn (EUR5bn peak) and allowed the borrower to price its trade 38bps inside IPTs and with a negative 3bp NIC. LEG offered more juice (~5bps NIC) when extending its curve, with final demand pegged at EUR1.4bn having peaked slightly higher at EUR1.45bn. Monday’s pair kicked off a week which participants in our latest issuance poll are expecting to yield an average EUR11.5bn of single currency corporate supply. Enforcing the notion of another busy week there was a flood of mandates Monday with six issuers announcing plans to come in the near future, namely Motability Operations Group (EUR 8/12yr & GBP 20yr social three-part), Inmobiliaria Colonial (exp EUR500m 5yr green), Teleperformance (EUR 5yr), Ipsos (EUR400m no grow 5yr), Societa Esercizi Aereoportuali (EUR300m no grow 7yr) and Norsk Hydro (EUR500m no grow 7yr green). See the IGM CORP SNAPSHOT
** In non-covered FIG, Monday’s trio made a EUR4.25bn dent in this week’s anticipated supply (average guess EUR14.5bn) to follow up last week’s EUR19.25bn bumper total. ABN Amro offered just the second two-part single currency sale of 2025 via EUR1.25bn 3yr FRN & EUR1bn 5yr FIX senior pref lines into respective final books of EUR1.8bn & EUR1.7bn. Having priced a blowout Tier 2 sale last week, BPCE returned with a 9nc8 SNP trade to raise EUR1.25bn into a huge EUR6.8bn final book which landed just inside the mid-point of the estimated fair value level. Shorter on the curve, Royal Bank of Canada’s EUR750m 6NC5 line was its first fixed-rate senior euro since Sep 2023 although more measured final demand worth EUR1.15bn necessitated a slightly higher NIC of ~7.5bps. Looking ahead and a trio have joined the pipeline comprising LBBW (long 5yr EUR500m SNP), The Toronto-Dominion Bank (EUR bmk 11NC6 T2) and Nova Ljubljanska banka d.d Ljubljana (EUR500m 4NC3 senior pref). See IGM’s FIG SNAPSHOT
** What looks set to be a boisterous week for covered issuance kicked off with EUR2.25bn worth of new notes across two transactions. Commerzbank clinched EUR4.5bn worth of orders for its EUR1.25bn Dec 2029 HP and Erste Group Bank commanded an equivalently impressive EUR4.5bn (peak and final) book for its EUR1bn Apr 2032 mortgage covered bond. Both lines landed flat to their secondary curves. Elsewhere, there was dollar issuance on offer from Commonwealth Bank of Australia (USD bmk Jan 2030s). In the pipeline, CCF SFH is touting a EUR benchmark 5.25yr OFH. Monday’s euro activity took us a third of the way through the EUR7.5bn average forecast for covereds put forward by respondents in our survey
** The IGM European Weekly Credit Overview is your comprehensive round-up of primary European new issue activity including pricing, order book information, new issue concessions and ISINs
Tuesday's supply prospects
SSA:
** The European Union (Aaa/AA+/AAA/AAA) mandated Barclays, BNP Paribas, JP Morgan, LBBW and NatWest Markets as Joint Lead Managers for its upcoming EUR dual tranche transaction comprising a new long 3yr benchmark line due Jul 2028 and an increase of EU 3.375% benchmark due Oct 2054 (EU000A3K4EY2)
** The Hellenic Republic (Ba1/BBB-/BBB-/BBB) hired (BofA Securities, Deutsche Bank, Goldman Sachs Bank Europe SE, Morgan Stanley, National Bank of Greece and Societe Generale as Joint Lead Managers for a new EUR 10yr benchmark CAC bond maturing Jun 2035
** Export Development Canada (Aaa /AAA) hired Barclays, Credit Agricole CIB, HSBC, J.P. Morgan and Morgan Stanley to lead manage a EUR 5yr benchmark
** Region Ile-de-France (Aa3/AA-) asked Credit Agricole CIB, J.P. Morgan, Natixis and NatWest Markets to lead manage its upcoming EUR Green and Sustainability benchmark maturing May 2035
** KfW (Aaa/AAA/AAA) is taking IoIs for a USD3bn no grow 5yr global at SOFR m/s +43 area IPTs via Barclays, HSBC, J.P. Morgan and Morgan Stanley as Bookrunners
** BNG Bank N.V (Aaa/AAA/AAA) is working a USD 5yr social at SOFR m/s +50 area IPTs via BofA Securities, JP Morgan, Nomura and TD securities
** CADES (Aa3/AA-/AA-/AA/AA-) mandated Barclays, Credit Agricole CIB, J.P. Morgan and Societe Generale as joint-lead managers for a USD2bn 5yr bond. IPTs are SOFR m/s +70 area
** The International Finance Corporation (Aaa/AAA) is working a USD 3yr global social bond at SOFR m/s +33 area IPTs via Barclays, Goldman Sachs International, Nomura and SEB
** Corporacion Andina de Fomento (Aa3/AA/AA-) is working a USD 5yr benchmark at SOFR m/s +90 area IPTs via BofA, Deutsche Bank, JP Morgan and Scotiabank
** Province of British Columbia (Aaa/AA-/AA+) mandated BMO Capital Markets, CIBC Capital Markets, J.P. Morgan, National Bank of Canada Financial Markets and RBC Capital Markets as Bookrunners for a USD 3yr global benchmark. IPTs are SOFR m/s +46 area
FIG:
** The Toronto-Dominion Bank mandated Barclays, Commerzbank, Deutsche Bank, Natixis and TD Securities as Active Bookrunners for its forthcoming EUR 11NC6 Tier 2 benchmark transaction. Expected ratings A/A3/BBB+/A (DBRS/Moody’s/S&P/Fitch)
** LBBW hired Commerzbank, ING, LBBW, Natixis, Nordea and Santander as Joint Bookrunners for its upcoming EUR500m no grow Mar 2030 senior non preferred trade, expected to be rated A2/A+/A by Moody’s/Fitch/DBRS
** Nova Ljubljanska banka d.d., Ljubljana mandated BNP Paribas, BofA Securities, Erste Group, Morgan Stanley, and Nova Ljubljanska banka d.d., Ljubljana as Joint Bookrunners and Raiffeisen Bank International as Co-Lead Manager to arrange a series of fixed income investor calls commencing 13-Jan. a EUR500m no grow 4NC3 Senior Preferred, expected to be rated Baa1 by Moody’s, will follow
Covered:
** CCF SFH mandated Commerzbank, Credit Agricole CIB, DZ BANK, Natixis and NORD/LB to lead manage its EUR 5.25yr benchmark French Obligations de financement de l'habitat (OFH) Covered Bond. The transaction is expected to be rated Aaa (Moody’s)
Corp
** France’s Teleperformance SE (BBB), a leader in outsourced customer and citizen experience management and related digital services, has mandated Citi, Deutsche Bank, JP Morgan, Standard Chartered Bank and Wells Fargo Securities as Active Bookrunners, to arrange a series of fixed income investor calls starting 13-Jan. A EUR 5yr senior unsecured bond transaction will follow. The net proceeds will be used for general corporate purposes
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Monday's broader market developments
** European stocks and bonds remained under pressure Monday as markets trimmed rate-cut bets with some inflation hawks even contemplating that the Fed’s current rate-cutting cycle may already be over. That after S&P500 (-1.54%) and Nasdaq (-1.63%) dropped Friday in the wake of a bumper NFP print, with those losses on course to extend on Monday. Brent crude hit its highest level since August as fresh US sanctions on Russia add support to a market which is already being supported by concerns over dwindling US inventories. We were devoid of any data in Europe or the US Monday, but overnight China trade data was in the spotlight where exports jumped by 10.7% YoY in Dec, chalked up to companies rushing out orders ahead of Trump’s second term in the White House
** Stoxx600 fell as much as 0.95% to follow a 0.84% drop on Friday. Tech stocks took the brunt Monday, down over 2.5% at one point
** Govvies: EGB yields continued to rise across the board with 10yr German yield having moved higher in every session of 2025 so far, up as high as 2.63% Monday
** Data:
- CH Dec Imports/Exports both higher than exp at 1.0%/10.7% (f/c -1.0%/7.5%, prev -3.9%/6.7%)
What to watch Tuesday – Lots of central bank speak
** Key Data: IT Nov Industrial Production (09:00), US Dec NFIB Small Business Optimism (11:00) and US Dec PPI Final Demand (13:30)
** Key Events: ECB’s Rehn (01:35), Lane (07:35) & Holzmann (08:00) speak, along with BoE’s Breeden (08:30) and Fed’s Schmid (15:00) & Williams (10:05)
** Auctions: NE to sell up to EUR2bn of 2054 DSLs (09:00), UK to sell GBP1bn 2054 Linkers (10:00) and GE to sell EUR5bn 2030s Bobls (10:30)
All times GMT
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