DAILY CLOSE: Investors treated to variety despite delicate backdrop
** Investors were treated to a smorgasbord of issuance across euros, sterling and dollars on Tuesday as issuers jumped in amid a fairly sedate opening for European stocks following Monday’s Wall Street drubbing. The tone got progressively worse as the session went on after US President Trump announced increased tariffs on Canadian goods, but all the day’s primary bond issuers managed to get their deals over the line. In the single currency a combined EUR14.55bn of IG paper priced (alongside a couple of HY trades), spearhead by SSA borrowers with EUR12.25bn which were led by the European Union taking EUR9bn out of the market via a Jan 2035 line. Sterling issuance came in at GBP5.85bn on the day, again dominated by one issuer, as the United Kingdom printed a GBP5bn Sep 2049 linker. For details of all the day's trades in euros and sterling, see the respective IGM DAILY EUR NICS & BOOKS and IGM DAILY GBP NICS & BOOKS
** The SSA arena saw action in all the major currencies Tuesday and with some relatively large volume transactions to boot. The EU proved that defence spending headlines would do little to upset the apple cart as it priced a new EUR9bn 10yr at m/s+65. That was (predictably) 1bp above fair value after 2bp were whittled away from IPTs. Rhineland Palatinate launched a new 2yr LSA and appeared to price 1bp through its own curve while with an EM hat on we witnessed BGK priced a dual tranche 5yr and 12yr with NICs of 0bp and 5bp respectively. The dollar space was also active as supranational EIB and AfDB priced 3yr and 5yr deals, with each taking 2bp from IPTs to land at SOFR m/s+32 and +43 respectively. New Zealand Local Government Funding Agency (LGFA) landed its debut USD deal, a USD500m 3yr, at SOFR m/s+44 after orders reached an impressive USD2bn. In sterling, the UK launched a new 2049 linker at UKTi+1 with the headline there being the order book which topped out at GBP67.5bn - the highest ever for an index-linked Gilt. More names entered the euro pipeline with Land Berlin, Unedic and NIB all throwing their hats into the ring for Wednesday action. See IGM's SSA SNAPSHOT
** UK borrowers had a monopoly on the IG corporate market Tuesday as SSE (EUR600m from exp 500m 7yr green) took an opportunistic approach, whilst Mondi (EUR600m from exp 500m long 8yr) and Bunzl (in line with exp GBP500m 6yr & 11yr two-part) emerged after calls on Monday. Standing out on the demand front was utility company SSA whose latest green peaked at EUR3.25bn, allowing the company to ramp in pricing 37bps from IPTs and issue 2bps inside fair value valuations. That tight pricing came at the expense of a chunk of orders though, with books falling considerably to EUR1.65bn at the final count. Packing company Mondi also saw some attrition in the book, with peak orders of EUR1.9bn dropping to EUR1.55bn having gone from m/s +150 area IPTs to a +120 reoffer (5bp NIC). Offering a sterling option Tuesday was distributor Bunzl via its first sterling trade since 2020, with combined demand for the GBP250m 6yr and GBP250m 11yr lines finishing at GBP1.535bn. More UK paper is expected this week from Manchester Airport Group (exp EUR500m 10yr secured debut) and Wessex Water (GBP 8.5yr & 15.5yr sustainability two-part) after both announced mandates Monday, whilst Swiss pair Galderma Group (debut 5yr benchmark) and SIG Group (EUR 5yr benchmark) were also already present in the pipeline ahead of Tuesday’s session. Joining them Tuesday morning was Finland’s Neste Oyj, with the borrower starting a two-day roadshow ahead of an expected EUR500m 5yr green bond. See the IGM CORP SNAPSHOT
** In non-covered FIG, another trio hit euros to raise EUR1.1bn between them, all via subordinated sales. From the pipeline came Credit Agricole Assurances with a EUR750m PNC10.75 RT1, seeing leads shave 25bps off 6.50% area IPTs into final books of EUR2.3bn, very close to the EUR2.4bn peak. In the Tier 2 space, Mediobanca raised EUR300m via a 10.5NC5.5 Sustainability line into a book last touted at EUR1bn while Banca Sella Holding took EUR50m via a 10NC5 T2 line on demand worth EUR70m. Added to Monday’s EUR2.1bn total, that takes the week to EUR3.2bn, a little under half the EUR7bn average guess
Wednesday's primary prospects
SSA:
** UNEDIC (Aa3/AA-/AA-)hired Credit Agricole CIB, J.P. Morgan, Natixis, NatWest and Societe Generale for its upcoming new EUR long 8yr social benchmark, maturing Nov 2033
** The German Federal State of Berlin (Aa1/AAA/AAA) mandated Barclays, Commerzbank, DekaBank, DZ BANK, ING and NORD/LB to lead manage its upcoming EUR 10yr benchmark Landesschatzanweisung
** Nordic Investment Bank (Aaa/AAA) mandated BofA Securities, Credit Agricole CIB and SEB as joint lead managers for a new EUR 7yr benchmark Environmental Bond (NEB)
** The Arab Bank for Economic Development in Africa (Aa1/AA/AAA) mandated the African Export-Import Bank, Citi, Deutsche Bank AG and J.P. Morgan as Joint Global Coordinators along with Emirates NBD Capital, Societe Generale and Standard Chartered Bank as Joint Bookrunners and Joint Lead Managers to arrange fixed income investor meetings and calls in London and Paris starting 10-Mar. A EUR 3yr senior unsecured bond will follow
Corp:
** UK name Manchester Airport Group Funding plc (Baa1/BBB+) mandated Barclays, BNP Paribas, NatWest and SMBC as Active Bookrunners to arrange a series of fixed income investor calls commencing 10-Mar. A debut expected EUR500m 10yr secured transaction is set to follow
** SIG Combibloc PurchaseCo S.a r.l. (Baa3/BBB-), guaranteed by SIG Group AG, the Swiss provider of innovative and versatile packaging solutions, mandated BNP PARIBAS and BofA Securities as Global Coordinators and together with Credit Agricole CIB, Rabobank, UBS and UniCredit as Joint Bookrunners, to arrange a series of fixed income investor calls 10-11 Mar. A EUR 5yr benchmark senior unsecured bond offering is expected to follow
** UK utility Wessex Water Services Finance Plc (Baa1/BBB+) mandated Barclays as Sole Sustainability Structuring Coordinator and Barclays, HSBC and NatWest as Active Bookrunners to arrange a series of fixed income investor calls and physical meetings 10-11 Mar. A GBP benchmark sustainability dual-tranche 9.5yr and 15.5yr transaction is expected to follow
FIG:
** Banque et Caisse d'Epargne de l'Etat, Luxembourg mandated Deutsche Bank as Global Coordinator and Belfius, Citi, Deutsche Bank and Societe Generale as Joint Lead Managers to arrange a series of fixed income investor calls commencing 10-11 Mar. A Green EUR500m no grow 6NC5 Senior Preferred offering, expected to be rated AA+ by S&P, will follow
Covered:
** Danish Ship Finance mandated Barclays, BBVA, Danske Bank, DekaBank and NORD/LB as Joint Lead Managers for a potential EUR500m no grow 6yr fixed-rate RegS Bearer transaction backed by shipping mortgages in Capital Centre A. The transaction is expected to be rated AA- (stable) by S&P
** 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
Monday's broader market developments
** Cooler heads looked to have prevailed on Tuesday with European stocks virtually flat throughout the morning, but then came under renewed pressure in the afternoon amid more tariff news. That after President Trump announced that he had instructed the US Secretary of Commerce to add an additional tariff of 25%, taking the level up to 50% on all steel and aluminium coming into the US from Canada. This action, Trump says, will go into effect Wednesday morning. Trump also added that there will be a substantial increase in tariffs on cars coming into the US from Canada on April 2nd, if Canada has not dropped their retaliatory tariffs by then. That saw US stocks open lower again following a thumping on Monday, with S&P500 (-2.7%) and Nasdaq (-4.0%) seeing chunky losses. Little in the way of data to move the needle Tuesday, but US NFIB small business optimism fell to a four-month low of 100.7, 2.1 points under the previous reading, as more businesses indicated a pause in investment as they assess Trump administration polices
** Stoxx600 got progressively worse as the session progressed, -1.86% at its nadir. Health Care stocks under the most pressure
** Govvies: Yields biased higher in the morning and then moves accelerated in the wake of tariff news. German bonds underperformed with 10yr bund yield rising as much as 6.8bps
** Data:
- JN Feb P Machine Tool Orders fell to 3.5% (prev 4.7%)
- US Feb NFIB Small Business Optimism missed at 100.7 (f/c 101.0, prev 102.8)
- US Jan JOLTS Job Openings higher than exp at 7740k (f/c 7600k, prev rev to 7508l from 7600k)
What to watch Wednesday – US CPI & lots of ECB speak
** Key Data: SP Jan Retail Sales (08:00), US Weekly MBA Mortgage Applications (11:00) and US Feb CPI (12:30)
** Key Events: ECB’s Simkus (08:00), Lagarde (08:45), Villeroy (09:15), Escriva (12:00), Centeno (12:45), Nagel (13:45), Lane (15:15) and Panetta (16:30) speak
** Auctions: UK to sell GBP4bn 2035 Gilts (10:00), GE to sell EUR4.5bn 2035 Bunds (10:30) and US to sell USD39bn 10yr Notes (17:00)
** Earnings: 9 Stoxx600 & 2 S&P500 companies release results
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