DAILY CLOSE: Friday goose egg rounds off busier week
** Issuers stayed away from the European primary market at the end of the week, with the focus instead on additions to the pipeline as three corporates mandated euro trades (see roadshow calendar below for details). Friday’s blank left the overall weekly single currency issuance total at EUR32.9bn and more than double the previous week’s EUR14.655bn. IG issuers accounted for EUR31.15bn of the latest haul, meaning we beat the average estimate of EUR27.5bn. SSAs did the heavy lifting with EUR18.25bn of the total, mainly thanks to the EU’s latest jumbo trade. For the full breakdown of this week’s single currency issuance by asset class and maturity, see IGM's WEEKLY VOLUME
** The SSA market saw its biggest euro week since mid-Sep as EUR18.25bn crossed the tape, although that was flattered by the European Union which tapped the market for the ninth time this year and did so with a EUR11bn dual-tap of existing lines. The longer-dated Oct 2039 line was marginally the most oversubscribed of the two, with order books exemplary at EUR166bn combined. Five other deals were priced in the single currency, whilst ten dollar deals were also issued across the SSA sector. Looking to next week and a few names are already in the pipeline with euro trades, including Land NRW (EUR 5yr sustainable) and Tokyo Met Government (EUR300m 3 or 5yr sustainable)
** Just five IG corporate borrowers tapped the market this week, raising EUR4.05bn via seven lines in the single currency, up from the lowly total of EUR2.15bn (four tranches) last week. The latest total wasn’t far off the average EUR4.5bn issuance estimate given by participants in our weekly issuance poll. The majority of this week’s trades were from either first-time or rare issuers, with that rarity or novelty value helping to entice investors and driving some large demand. Combined orders for the EUR4.05bn of paper finished up at EUR17.3bn, with an average cover ratio of 4.2x recorded, showing that there is plenty of cash around for the right trade/name. See the IGM CORP WEEKLY for a full recap
** In non-covered FIG, seven issuers from seven different jurisdictions raised EUR4.2bn this week via senior and subordinated paper. Buyers were keen to add inventory where combined total orders worth EUR13.2bn were enough to generate a simple average cover ratio of 3.54x. With strong demand came keen pricing too where issuers secured funding at little to no premium relative to existing curves while the prospect of light supply in the near term kept the vast majority of orders on board through to final pricing. See IGM’s FIG WEEKLY
** In the covered space, a EUR3.65bn/7-deal week topped the EUR2.5bn average guess although uncertainty was high coming into the week where some thought as much as EUR5bn would price with the most pessimistic respondent having predicted a goose egg. This week’s deals were covered by an average 1.91x with the average NIC coming in at 3.3bps, the latter consistent with the upward trend seen in recent months. YTD supply now stands at EUR149.75bn, some 15% behind the pace seen at the same stage of 2023 although the 2024 run rate looks unlikely to materially improve in the near term now that earnings blackouts are upon us
** EUR11.595bn equiv of ESG paper over 11 tranches priced during a moderately paced week across all asset classes in EUR, USD and GBP currencies, equating to 24.97% of total issuance. By asset class, SSA issuers sold the majority at EUR7.817bn equiv (67.42%), Corporate deals totalledEUR3.3bn (28.46%), whilst a sole sterling FIG deal accounted for EUR478m equiv (4.12%). See IGM’s Europe Credit ESG Weekly (w/e 11-Oct-2024)
** A fairly packed pipeline belies the results of our survey where a quiet week is expected where an average combined estimate of just EUR14bn (ex-HY) was put forward by respondents. SSAs will lead the pack with Land NRW, Land Baden-Wuerttemberg and Met Tokyo having already primed the market with announcements. See IGM's Euro Issuance Estimates (w/c 14-Oct-2024)
IGM Credit Excel spreadsheets and reports
** 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
** 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
** 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
IGM's legal notices
This week's tender announcements include Royal FrieslandCampina N.V. (XS2228900556).
This week's consent announcements include Orange (US35177PAL13)
You can find these and more on IGM's Legal Notices story look-up, where clients can access announcements on tenders, consents, exchanges and stabilisation notices.
For IGM's Legal Notices click here.
Friday's broader market developments
** European stocks rallied Friday afternoon in line with Wall Street bourses. That after US PPI came in lower than expected at 0.0% for the month, whilst JPMorgan Chase & Co shares jumped in the wake of earnings which topped analysts' expectations. EGB yields followed UST yields higher, the latter coming after Friday’s data and after Fed’s Bostic on Thursday (via the WSJ) said he was open to a rate pause in November “if the data suggests that’s appropriate”
** Stoxx600 gained as much as 0.54%, led by Real Estate
** Govvies: EGB yields moved higher in tandem, and were set to end the session 3-5bps wider on the whole. Italy sold a chunky EUR9.5bn via Friday auction
** Data:
- GE Sep F CPI confirmed at 0.0% MoM / 1.6% YoY
- UK Aug Industrial/Manufacturing Production beat at 0.5%/1.1% MoM (f/c 0.2%/0.2%, prev rev to -0.7%/-1.2%)
- UK Aug Monthly GDP as exp at 0.2% MoM (prev 0.0%)
- US Sep PPI Final Demand lower than exp at 0.0% MoM (f/c 0.1%, prev 0.2%)
- US Oct P Uni of Michigan Sentiment missed at 68.9 (f/c 71.0, prev 70.1)
What to watch Monday (and for the week)
** Key Data: CH Sep Imports/Exports (08:00)
** Key Events/Speakers: ECB’s Nagel (07:15) & Villeroy (08:00), BoE’s Dhingra (07:30) and Fed’s Kashkari (14:00 & 22:00) and Waller (20:00)
** Auctions: No major term auctions scheduled for Monday 14th Oct
** Holidays: US Columbus Day, Japan Health-Sports Day
** Viewpoint - The week ahead:
- ECB to cut 25bp (Thursday). Hint of December follow-up? Q3 BLS (Tuesday). SPF (Friday)
- US September retail sales, IP/manufacturing output CPI (Thursday). September PPI (Friday)
- UK labour market report (Tuesday). September CPI/PPI (Wednesday). September retail sales (Friday)
- Canadian September CPI (Tuesday). September housing starts & August manuf sales (Thursday)
- German Sept ZEW (Tuesday). EMU August IP (Tuesday), trade/final September CPI (Thursday)
All times BST
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