DAILY CLOSE: Latest batch push euro issuance beyond expectations
** A neutral opening for stocks provided the springboard for an uptick in European bond issuance on Thursday, with borrowers making funding plays across the three core currencies. Euro supply, however, was limited to corporate and financial names, where fourteen tranches priced for a combined EUR8.15bn. The latest flurry put the weekly single currency haul at EUR36.57bn and within striking distance of the EUR38.5bn average weekly estimate given by participants in our issuance poll. Thursday’s offerings all but emptied the public pipeline, but should the tone allow, we could see some more activity on Friday and push us even closer to the average guess. See IGM’s DAILY EUR NICS & BOOKS for full details of Thursday’s euro deals
** Away from the single currency and the sterling market was active as we saw the most tranches of any day so far this year. That as six issuers raised a combined GBP2.8bn, with issuance spanning all the IG asset classes, as fully detailed in the IGM DAILY GBP NICS & BOOKS
** In the IG corporate market, we had both euro and sterling paper on the menu Thursday as SES S.A (EUR1bn 30NC5.25 & 30NC8 two-part hybrid; 3.7bn jt bks), Gas Networks Ireland (EUR300m n/g 6yr; 1bn bk), Pearson plc (GBP350m 10yr education bond; 1.05bn bk) and Anglian Water (GBP600m 10yr secured green; 5bp NIC & 1.35bn bk) emerging from the pipeline. On top of that, Danone (EUR700m 7yr bmk; 5bp NIC & 1.95bn bk), Arkema (EUR500m n/g 10yr; 2.6bn bk) and Sandoz (EUR600m 5yr, from exp EUR500m, 8bp NIC & 1.7bn bk) took an opportunistic approach. The day’s euro lines, which totalled EUR3.1bn and amassed orders worth a combined EUR10.95bn (EUR12.65bn peak), pushed the weekly total up to EUR10.35bn and just short of the EUR11.5bn issuance estimate. For more background on all the day’s trades see the IGM CORP SNAPSHOT
** In non-covered FIG, six issuers (four via SNP/senior holdco trades, one senior pref and one Tier 2) raised EUR4.5bn, taking the week to EUR12.12bn. That’s above the EUR8.5bn average estimate, but short of the highest estimate of EUR15bn. Such high supply will leave bankers on watch for any signs of indigestion, but it remains challenging to find definitive evidence of such in the data where combined books for Thursday’s EUR4.5bn in new paper was last touted at EUR10.975bn. With that, funding continues to come at relatively cost-effective levels where Wednesday’s average NIC was 3bps (where this was sufficiently transparent to accurately ascertain). Half of the day’s euro deals carried an ethical tag. Elsewhere, a further duo hit sterling to raise GBP800m (week now GBP1.75bn), making for the biggest week for sterling supply in three months. There was also further AT1 supply in dollars too as ING Group saw a monster USD8.4bn book for its USD1bn PNC 2034 line. See IGM’s FIG SNAPSHOT
** SSA activity was limited to the dollar and sterling markets on Thursday leaving EUR issuance floundering at just EUR8.1bn for the week (well below the EUR13.5bn average estimate). Two European issuers and a supranational visited the USD market with CADES and Swedish Export Corp both bringing 3yr transactions whilst the International Development Association pushed a little further along the curve to a 7yr tenor (and with a sustainability label) in the process attracting orders of USD5.8bn. CADES priced its USD3bn line 2bp wider than SEK's USD1.25bn line having both started marketing proceedings with the same IPTs (SOFR m/s+43) and despite the much larger order book, in both absolute and coverage terms, for the former. The French social security financier priced with a small 2bp NIC whilst an interpolation across the SEK USD curve suggested a more aggressive approach was taken there (with a -1bp NIC assigned). International Finance Corp was the solo operator in the GBP market, but limped to a GBP190m book for a GBP300m 6yr deal at a spread of SONIA m/s+34 (or around 2bp wider than a recent tap of an IADB 6yr bond). See IGM's SSA SNAPSHOT
** Covered issuer Banca Sella emerged to print an inaugural EUR400m Jan 2029 OBG on Thursday after concluding investor calls the day before. The long 4yr line landed at m/s +64 reoffer, 4bp inside guidance and on books of EUR700m+ (1.75x). It takes total euro issuance to EUR5.65bn so far this week, EUR650m above the EUR5bn average estimate in our survey
Friday's primary prospects
FIG:
** Macquarie Bank Limited mandated Credit Agricole CIB, Natixis and Societe Generale to arrange a series of fixed income investor meetings commencing 29-Aug. A EUR benchmark Green Senior Unsecured offering with a short to intermediate tenor may follow
** 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
Thursday's broader market developments
** EU stocks lacked a clear direction for much of the session with markets looking to Friday’s NFPs to help settle whether the Fed’s first cut in over four years will be a 25bps or 50bps affair. ADP Employment fell short of expectations (weakest since Jan 2021) although Jobless Claims were lower than forecast
** Stoxx600 stayed within 0.5% of Thur’s close. Utilities gained, Healthcare biggest faller
** Govvies: EGB yields nudged a little lower with large auction supply from France and Spain easily absorbed
** Data:
- GE Jul Factory Orders beat at 2.9% MoM (f/c -1.7%, prev rev to 4.6% from 3.9%)
- UK Aug S&P Global Construction PMI missed at 53.6 (f/c 54.5, prev 55.3)
- EC Jul Retail Sales MoM missed at 0.1% (f/c 0.2%, prev rev to -0.4% from -0.3%)
- US Aug ADP Employment Change below f/c at 99k (exp 145k, prev rev to 111k)
- US Weekly Initial/Continuing Jobless Claims both lower than f/c at 227k/1838k (exp 230k/1867k, prev rev to 232k/1860k)
- US Aug ISM Services Index above f/c at 51.5 (exp & prev 51.4)
What to watch Friday - US payrolls
** Key Data: GE Jul Industrial Production (07:00), GE Jul Imports/Exports (07:00), FR Jul Industrial/Manufacturing Production (07:45), EC Q2 F GDP (10:00), US Aug Change in Nonfarm Payrolls (13:30), US Aug Unemployment Rate (13:30) and US Aug Average Hourly Earnings (13:30)
** Key Events: Fed’s Williams (13:45) and Waller (16:00) speak
** Auctions: BE to sell bonds through Ori auction (11:00)
** Earnings: 3 Stoxx600 companies report
All times BST
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