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DAILY CLOSE: Motability Operations does heavy lifting Monday, EU and UK wait in wings

** Feedback on Friday suggested the primary bond market could be very busy at the start of this week but given political developments over the weekend it was a slow session Monday with many go/no-go calls resulting in a no-go verdict. Just three issuers brought new deals on the day in the form of British Columbia (EUR Jul 2034 tap), HKFoods (EUR 3NC2.5 FRN) and Motability Operations Group which led the way with a mixture of EUR (long 5yr & 11yr) and GBP (27yr) socials. See IGM's DAILY EUR NICS & BOOKS for details of the single currency trades which kicked off a week that was supposed to yield EUR31bn in single currency paper according to our issuance poll - which was of course conducted before the uncertainty created by a strong showing for the far right in the European elections over the weekend

** Corporate issuer Motability Operations Group braved the volatile markets on Monday with a three-part EUR/GBP social issue having reached out to investors at the end of last week via a series of calls. Given the backdrop, and the fact the UK issuer went for size, it was perhaps not a surprise to see them take a pragmatic approach to pricing, shaving 20bps from IPTs on the EUR1bn Jan 2030 and EUR1bn Jun 2035 euro tranches to land with 23-25bps NIC, whilst the GBP500m Jun 2051 landed with a 20bp premium having been tweaked 15bps from IPTs. Final demand finished at EUR2.2bn (2.3bn peak), EUR2bn (2.2bn peak) and GBP1.1bn (1.2bn peak) respectively. Joining a handful of names already in the pipeline was British luxury fashion house Burberry Group with a GBP 6yr to follow calls that started on Monday. See the IGM CORP SNAPSHOT

** Live SSA issuance was limited to an opportunistic tap from Province of British Columbia on Monday. The borrower reopened its existing EUR1.25bn Jul 2034s for a further EUR600m, with the tap pricing in line with initial guidance of m/s +44 area (~3bp NIC) on the back of demand that settled at EUR1bn (also peak). Elsewhere on Monday, the European Union firmed up plans for its next offering and announced a new Oct 2039 benchmark which is to come Tuesday alongside deals from The United Kingdom (GBP Jul 2035s) and Asian Development Bank (USD Jun 2028 Global), with the latter already announcing IPTs at SOFR m/s +30 area. Higher absolute yields could help lure buyers for those deals if recent experience is any guide given Spain's jumbo EUR125bn / 12x book for its EUR10bn 10yr sale on May 29th when yields were just above current levels

** In non-covered FIG, the politically driven volatility laid waste to any plans by issuers to strike early in the week with the sole development being a pipeline addition by CEE lender Powszechna Kasa Oszczednosci Bank Polski S.A (EUR bmk 5NC4 SNP). It remains to be seen whether the market will reopen Tuesday but, if it does, key will be whether buyers can drive a better bargain after a long spell of minimal NICs where the weekly average concession over the past six weeks stands at just 2.45bps. Whatever the case, the decision by the thirteen issuers to price EUR11.175bn last week currently looks like a sound one. See IGM's FIG SNAPSHOT

** The covered market saw no live issuance on Monday, with only two borrowers emerging to mandate upcoming deals in the single currency. From Australia, Bendigo and Adelaide Bank announced a benchmark long 5yr line to follow a roadshow next week, while Skipton Building Society mandated a EUR500m no grow issue with a 5yr maturity. In sterling, The Co-Operative Bank is looking to launch a benchmark sized 3yr SONIA-Linked CB

** 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


** The European Union (Aaa/AA+/AAA/AAA) mandated Barclays, Deutsche Bank, HSBC, J.P. Morgan and Nordea as Joint Lead Managers for its upcoming EUR fixed rate new 15yr benchmark due Oct 2039

** PSP Capital Inc (Aaa/AAA/AAA/AAA) recruited BNP Paribas, Credit Agricole CIB, HSBC, RBC CM and TD Securities as Joint Lead Managers on an inaugural EUR Reg S transaction

** The United Kingdom (Aa3/AA/AA-) mandated Barclays, Citi, Deutsche Bank, Lloyds Bank Corporate Market, NatWest Markets and RBC CM to lead manage the upcoming launch by syndication of the Treasury Gilt maturing on July 2034

** Asian Development Bank (Aaa/AAA/AAA) is working a USD 5yr global at SOFR m/s +30 area IPTs via Barclays, BMO Capital Markets and Scotiabank


** Powszechna Kasa Oszczednosci Bank Polski S.A mandated Erste Group as Global Coordinator and BNP Paribas, Erste Group, J.P. Morgan, PKO Bank Polski S.A. and UniCredit as Joint Lead Managers to arrange a series of Fixed Income investor calls on 10-Jun. A EUR benchmark Reg Senior Non-Preferred offering with a 5NC4 maturity will follow. The Notes are expected to be rated Baa3 (Moody's)


** Skipton Building Society mandated ABN AMRO, BBVA, Danske Bank, HSBC and LBBW to lead manage a new EUR500m no grow 5yr fixed rate covered bond. The bond is expected to be rated Aaa/AAA by Moody's/Fitch


** Stedin Holding N.V (A-) hired BNP Paribas, ING, Rabobank and SEB as Joint Bookrunners to arrange a series of fixed income investor calls 11-Jun. A EUR500m no grow 7yr transaction will follow. An amount equal to the net proceeds of the issue of the notes will be allocated to finance and/or refinance a portfolio of green eligible projects as set out in Stedin's green finance framework

** Burberry Group Plc (Baa2) which has hired HSBC, J.P. Morgan, Lloyds and NatWest Markets as Joint Active Bookrunners to arrange a series of fixed income investor calls commencing 10-Jun. A GBP 6yr senior unsecured benchmark transaction will follow


** Webuild SpA (BB/BB) hired BofA Securities, BNP Paribas, Goldman Sachs International, HSBC, IMI - Intesa Sanpaolo, J.P. Morgan, Natixis and UniCredit for a EUR400m exp 5yr senior unsecured bond offering

** 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 - Political worries spark coordinated weakness in multiple asset classes

** French assets led a retreat on Monday with bonds, stocks and EUR all falling sharply. Comes as markets fret over increased political fragmentation and policy deadlock following a strong showing for the far right in the European elections and after French President Macron called a snap legislative election (see Viewpoint for more). Data exerted little impact where Eurozone Sentix Investor Confidence index improved for an 8th straight month in June and was positive for the first time since Feb 2022 while Italian Industrial Production contracted by more than expected in April. ECB officials remained cautious on further easing. Kazmir: ECB must wait for Sep before deciding on next cut

** Stoxx600 -0.88% at worst

** Govvies: 10yr GER yield up to 5.7bps higher at 2.667%. 10yr FR yield up to 12.4bps higher to a new YTD high of 3.222%. Next target is the Nov peak at 3.228%.

** Data:

- IT Apr Industrial Production MoM missed at -1.0% (exp 0.2%, prev -0.5%)

- EC Jun Sentix Investor Confidence beat at 0.3 (exp -1.7, prev -3.6)

What to watch Tuesday - Lots of ECB chat

** Key Data UK Apr ILO Unemployment Rate (07:00), UK Apr Average Weekly Earnings (07:00), UK May Payrolled Employees Monthly Change (07:00) and US May NFIB Small Business Optimism (11:00)

** Key Events: ECB's Simkus (08:00), Villeroy (08:10 & 12:00), Rehn (09:00), Holzmann (12:00), Lane 12:05) and Elderson (17:45) speak. FOMC Meeting begins 15:00)

** Auctions: NE to sell up to EUR2bn 2034 DSLs (09:00), FI to sell EUR 2035 and 2055 Bonds (11:00) and US to sell USD39bn 10yr Notes (18:00)

We invite you to join IGM's upcoming webinar "Diverging monetary policy, geopolitics, and the impact on FICC markets in H2" on 18 June at 3pm BST/10am ET.

With seemingly ever-changing monetary policy outlooks and war in various parts of the world perhaps it was inevitable that the historical chief haven, gold, would outperform and hit fresh highs in the first half of the year. Markets are now not even sure in which direction the Fed Funds Target Rate is headed next.

So, as we navigate through these complex dynamics, including the uncertainties of election outcomes, IGM's analysts are here to provide clarity and insights into what lies ahead for credit, FX, and rates markets in the remainder of the year. Join us for an engaging discussion on how diverging monetary policies and geopolitical events will shape market trends and investment strategies.

Register for the webinar

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