DAILY CLOSE: FIG issuers dominate Monday, mandates build
** Unsecured financial names drove a strong start to the week for European bond activity as issuers front-loaded ahead of a raft of earnings reports and key data releases due in the coming sessions. In total we saw seven separate single currency lines price for EUR6.75bn on Monday, making a big dent in the average weekly issuance estimate of EUR19.5bn given by market participants in our weekly issuance poll. On the day, non-covered FIG issuers accounted for some EUR5bn (five deals) of the overall total, with full details of each offering in the usual IGM DAILY EUR NICS & BOOKS. More issuers were also lining up deals for the near future on Monday, whilst the wildcard remains corporate borrower DSV which continues to roadshow an M&A-driven EUR six-part on Tuesday
** In non-covered FIG, an empty pipeline proved no barrier to a fast start to the week where five hit euros to raise EUR5bn, topping the EUR4bn average guess in one fail swoop. Demand for the deals which tested the full capital structure was plentiful where books finished up at EUR11.05bn (peak EUR13.55bn), facilitating some cost-effective funding relative to existing curves. Going in alphabetical order came Barclays PLC (EUR1.25bn from bmk 11nc10 senior HoldCo; bks EUR5.1bn; NIC zero) while catering for higher yielding palates was Belfius Bank via a rare AT1 (EUR500m no grow PNC7 AT1; bks EUR1bn), its first such sale since January 2018. From the periphery, Mediobanca offered its first senior pref since November (EUR500m no grow long 6NC5; bks EUR1.0bn; NIC -3). Going short were NatWest Markets Plc (EUR1.25bn from bmk 3yr senior OpCo; bks EUR2.0bn; NIC 3) and Royal Bank of Canada (EUR1.5bn from bmk 2yr senior FRN; bks EUR1.95bn). Away from the single currency, Skandinaviska Enskilda Banken boosted USD AT1 supply (USD500m Reg S PNC7; bks USD1.755bn). The pipeline saw one new addition with LBBW mandating banks for Monday calls ahead of a potential EUR750m PNC 4/2031 AT1. Elsewhere, thoughts remain on earnings where updates are due Tuesday from Banco Santander, HSBC & Jyske Bank. See IGM’s FIG SNAPSHOT
** Offering Monday’s sole IG corporate transaction was Carrier Global Corporation, with the US borrower getting in ahead of the looming US presidential election and extending its curve with an opportunistic EUR Jan 2037 line. Having initially touted a benchmark size, CARR took EUR750m out of the market via the long 12yr at m/s +125 (zero NIC) after tightening from m/s +160 area IPTs on bumper demand of EUR2.5bn (EUR3.1bn peak). Announcing a series of calls for Tuesday were Germany’s Vier Gas Transport GmbH (EUR500m no grow 7yr) and another US firm in the form of Avery Dennison Corporation (EUR500m no grow 10yr). The duo could go head-to-head with DSV’s jumbo six-part which is also likely Wednesday given that the borrower is wrapping up a three-day series of investor meetings of its own Tuesday. That deal, to be launched to help fund DSV’s ~EUR14.3bn acquisition of Schenker AG from Deutsche Bahn, is set to be the first six-part euro corporate trade of the year and is likely to rival Siemens’ EUR5bn five-part from Feb as the sector’s biggest trade of 2024. See the IGM CORP SNAPSHOT
** SSA issuers were not expected out in force this week with an average estimate of just EUR5.5bn predicted by respondents in our latest survey. KfW accounted for a EUR1bn of that with an Oct 2029 green tap conducted Monday. The transaction saw just EUR990m of demand with the deal landing in line with IPTs and also fair value. Mandates also emerged from The Slovak Republic (7yr benchmark) and Kommunalbanken (EUR500m 7yr green) but given that the largest ever deal from the former is EUR3bn (its last outing in Feb 2024) we are unlikely to threaten the weekly estimate just yet
** Covered issuers steered clear of the new issue space on the week’s opening session, following last week’s EUR2bn haul from four issuers. Fresh supply is imminent, however, with La Banque Postale Home Loan SFH announcing plans for a new 6yr social bond. This is set to be the issuer’s second covered outing this year, having printed a EUR750m Jan 2034 Green OFH back in January
** 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 primary prospects
Corp:
** Heimstaden Bostad AB (BBB-/BBB-), a leading European residential real estate company, hired BNP PARIBAS, Citi, Deutsche Bank, J.P. Morgan, and Swedbank as Joint Bookrunners to arrange a series of fixed income investor calls commencing 28-Oct. A EUR500m no grow 5yr offering may follow
FIG:
** Landesbank Baden-Württemberg mandated Deutsche Bank and LBBW as Co-Structuring Agents to the Issuer and BofA Securities, Credit Agricole CIB, Deutsche Bank, J.P. Morgan, LBBW and UBS Investment Bank as joint lead managers to arrange a series of fixed income investor calls on 28-Oct. A EUR750m no grow Perpetual Reset Apr 2031 Additional Tier 1 transaction will follow. The securities will feature principal loss absorption in the form of temporary write-down, based on a 5.125% CET1 Ratio trigger and are expected to be rated Baa3 (hyb) by Moody’s
Covered:
** La Banque Postale Home Loan SFH mandated Barclays, BBVA, Deutsche Bank, ING, LBBW, La Banque Postale and Natixis to lead manage its EUR 6yr French Obligations de Financement de l'Habitat (OFH) CRD IV compliant / ECBC Covered Bond labelled soft-bullet Social benchmark. The tranche is expected to be rated AAA by S&P
SSA:
** The Slovak Republic (A2/A+/A-) mandated Citi, CSOB (KBC Group), Deutsche Bank and J.P. Morgan as Joint Lead Managers and Joint Bookrunners for a EUR new 7yr benchmark offering
** KOMMUNALBANKEN (Aaa/AAA) hired Credit Agricole CIB, Danske Bank and Natixis to lead manage its upcoming EUR500m no grow 7yr green bond
** Swedish Export Credit Corporation (Aa1/AA+) is working a USD 2.5yr floating rate benchmark at SOFR + 35 area IPTs via Citi, HSBC and Morgan Stanley
HY:
** Takko Fashion GmbH mandated Deutsche Bank (B&D), UniCredit as Joint Physical Bookrunners and Goldman Sachs as Joint Bookrunner for a EUR350m 5.5NC2 Senior Secured Notes, expected ratings B3/B-/BB-
** Techem Verwaltungsgesellschaft 675 mbH, a leading energy services provider to residential and commercial real estate across Europe, has mandated GS (B&D), UBS as JGCs and Joint Physical Bookrunners and JPM, SMBC, BNPP, CA-CIB, NatWest Markets, UniCredit, Natixis, Commerzbank, DB, LBBW as Joint Bookrunners for a EUR750m tap of the outstanding EUR500m 5.375% Jul 2029 144A/Reg S senior secured notes. Expected ratings B2/B+/B+
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Monday's broader market developments
** It was a quiet start to the week on the data front but that is set to change as the week progresses. US and Eurozone GDP figures come Wednesday alongside German CPI, before Eurozone (CPI) and US (PCE deflator) on Thursday are followed up by NFP on Friday. European markets opened up in positive territory and looked to be heading towards a close in the green despite a dip in momentum around midday. The broad looking Stoxx600 is finishing stronger (+0.54%) although France's CAC outperformed (+0.92%) despite the outlook change from Moody's on Friday (its Aa2 rating was placed on negative watch which still leaves it one notch above the AA- from S&P, for now at least). Attention will be back on earnings Tuesday with 19 Stoxx600 and 39 S&P500 names reporting (175 names are slated to update in the latter index by the end of the week)
** Stoxx600: momentum ebbed and flowed with a positive move later in the day. Industrials and financials the biggest gainers (around 1% apiece) whilst energy stocks (-1.53%) remained in the doldrums as oil prices eased after Israel didn't target oil targets in Iran over the weekend.
** Govvies: EGB yields lower, led by front end (GER 2yr -3.2bp). Gilts almost exact opposite with higher yields especially at the 2yr tenor (+3.8bp). USTs 3-4 higher across the curve.
** Data:
- SP Sep Retail Sales YoY came in at 1.7% (prev 3.1%)
- UK Oct CBI Retail Reported Sales fell less than expected at -6 (exp -10)
What to watch Tuesday – Earnings at the forefront
** Key Data: GE Nov GfK Consumer Confidence (07:00), UK Sep Mortgage Approvals (09:30), US Sep P Wholesale Inventories (12:30), US Aug FHFA House Price Index (13:00), US Sep JOLTS Job Openings (14:00) and US Oct Conference Board Consumer Confidence (14:00)
** Key Events: No key events scheduled for Tuesday 29th Oct
** Auctions: UK to sell GBP4bn 2029 Gilts (10:00), GE to sell EUR4bn 2029 Bobls (10:30) and US to sell USD30bn 2yr FRNs & USD44bn 7yr Notes (17:00)
** Earnings: 19 Stoxx600 & 39 S&P500 companies report. Former includes HSBC and Santander
All times GMT
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