DAILY CLOSE: Pipeline additions point to pick-up ahead
** Despite a rather large relief rally at Monday's open, the first session of the month and quarter delivered a blank in the single currency with markets understandably preoccupied with assessing the implications of the weekend's political developments in France. While nothing priced on Monday, IPTs were released on two high yield deals though while KfW was putting the finishing touches to a digital bond and the pipeline saw a flurry of new additions encompassing corporate, SSA and covered trades (see details below). That comes after euro issuance eased last week to EUR19.805bn, falling short of the previous week's EUR21.83bn
** It was a slow day in the SSA market with little except a dollar dual tranche from Polish issuer BGK getting over the line. BGK had seen 20bp and 25bp cut from IPTs on its proposed 10yr and 30yr lines at the time of writing leaving guidance at T+145a and T+170a respectively. With total books of USD5.5bn the deal looked set to get away successfully. Finally getting underway after spending quite some time in the pipeline (roadshow commenced 7th May and concluded 17th June) is KfW with its debut EUR blockchain-based digital bond with a 1.5yr tenor. The issuer appears to have dangled a 10bp carrot in front of prospective investors (price set at KfW+10bp) to ensure participation in a format which is still in its infancy. Pointing to a busier day tomorrow we received a mandate on the EUR side from German agri-development financier Rentenbank (7yr benchmark) and the European Investment Bank (EIB) initiated a climate awareness bond (CAB / green) with a similar tenor in the dollar market. See IGM's SSA SNAPSHOT
** In non-covered FIG, issuers were firmly in wait-and-see mode while the pipeline remained empty too. If last week is any guide, tone permitting, there should still be cash and appetite on hand to support correctly pithed product though given that the EUR3.55bn which priced was underpinned by aggregate orders worth EUR14.05bn. See IGM's FIG SNAPSHOT
** After seven IG corporates priced deals last week worth EUR4.65bn on combined books of EUR14.75bn, this week is expected to yield a rather measured EUR2.5bn, albeit with that average estimate subject to a higher than average level of uncertainty. Assuming the tone holds, we could see the first instalments of that supply as soon as Tuesday following a small flurry of mandates announced on Monday (see below)
** The covered arena saw no new deals print on Monday but two borrowers announced mandates for upcoming euro deals. While Raiffeisen Bausparkasse Gesellschaft announced an inaugural EUR300m no-grow HP with a 5yr maturity, DZ HYP mandated its first green CB in almost a year, a EUR500m no-grow long 4yr
** IGM weekly reports
** Another muted week for ESG trades saw a sum of just EUR4.04bn equivalent raised in Europe (that represented only 11% of overall issuance) across seven EUR and USD tranches. Corporates claimed the bulk of activity, followed by non-covered FIG where we saw the largest ethical deal size of the week come from Royal Bank of Canada (a EUR1bn 4NC3 green senior FRN). See IGM's Europe Credit ESG Weekly (w/e 28-Jun-2024)
Tuesday's primary prospects
SSA:
** Bank Gospodarstwa Krajowego (BGK) (A2/A-), irrevocably and unconditionally guaranteed by the State Treasury of the Republic of Poland under English law, rated (A2/A-/A-), has engaged BNP Paribas, Citi, Deutsche Bank, Goldman Sachs Bank Europe SE and J.P. Morgan as Joint Bookrunners for a USD Jul-2034 and July-2054 dual tranche Rule 144A/Reg S Cat 1, Registered Form Senior Unsecured issue, expected ratings A2/A-.
** The City of Madrid (Baa1/A) has mandated CaixaBank & Credit Agricole CIB as Joint Bookrunners for a EUR128m no grow Oct-2034 Reg S, fixed rate, senior unsecured bond transaction, expected ratings Baa1/A.
** EIB (Aaa/AAA/AAA) has delegated Barclays, Citi and Morgan Stanley to lead manage a USD 7y (10-Oct-2031) fixed rate, SEC-registered Climate Awareness transaction.
** REC Limited (Baa3/ BBB-) has hired Barclays, DBS Bank Ltd., HSBC, Mizuho, MUFG and Standard Chartered Bank as Joint Lead Managers and Joint Bookrunners for a USD long 5y Rule 144A/Regulation S senior green notes issue.
** Rentenbank (Aaa/AAA/AAA), guaranteed by the Federal Republic of Germany, has recruited Danske Bank, DekaBank, J.P. Morgan and NatWest Markets to lead manage a EUR 7y Reg S, Bearer transaction.
Corporates:
** Eesti Energia AS (Baa3/BBB-) has employed Goldman Sachs Bank Europe SE as Sole Global Coordinator and Joint Lead Manager and AS LHV Pank as Joint Lead Manager for a EUR300m exp PerpNC5.25, Reg S Bearer, hybrid green transaction, expected instrument ratings B1/B+.
** Grand City Properties S.A. (BBB+) has mandated Citi, Credit Agricole CIB, Goldman Sachs International and J.P. Morgan as Joint Bookrunners for a EUR long 5y EUR Reg S, fixed rate, senior unsecured notes offering.
Covered:
** Banca Popolare dell Alto Adige SpA (Südtiroler Volksbank AG) has engaged UniCredit as Global Coordinator and Erste Group, LBBW, Raiffeisen Bank International and UniCredit as Joint Bookrunners to lead manage a EUR300m no grow 7y Reg S Bearer Obbligazioni Bancarie Garantite - European Covered Bond (Premium) issue, backed by 100% Italian residential mortgages and expected to be rated AA.
** DZ HYP AG has delegated DekaBank, DZ BANK, Erste Group, NatWest Markets, NORD/LB and Societe Generale to lead manage a EUR500m no grow 4.2y Green Mortgage Covered Bond, expected to be rated Aaa/AAA.
** Raiffeisen Bausparkasse Gesellschaft m.b.H. has appointed DZ BANK, Helaba, Raiffeisen Bank International and UniCredit as Joint Bookrunners for a EUR300m no grow 5y fixed-rate Mortgage Covered Bond (Hypothekenpfandbrief), expected to be rated Aaa.
HY:
** KIKO MILANO (Issuer: Duomo BidCo S.p.A) has employed Barclays, Deutsche Bank as Joint Global Co-ordinators and Physical Bookrunners and Unicredit, Intesa Sanpaolo as Joint Bookrunners for a EUR500m 7NC1 (par) Reg S/144A Senior Secured Floating Rate Notes, expected ratings B2/B+.
** Greenalia S.A. has mandated Clarksons Securities AS, Pareto Securities AS, and Nordea Bank Abp, filial i Norge on a EUR220m 5y senior secured green bond issue.
** 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
** Adds The City of Madrid, Eesti Energia, Grand City Properties SA, Phoenix PIB Dutch Finance BV, RAI Radiotelevisione Italiana, Warba Bank, Vodafone Spain **
Monday's broader market developments - big move up in yields
* French assets led a sharp opening bounce (CAC +2.8% at best) but gains were trimmed as markets pondered considerable and residual uncertainty over the outcome of the second round vote in French elections. 10yr OAT/Bund spread narrowed to below 75bps (from Fri's 12yr wide above 84bps) but remains well above the 53bps level seen before President Macron called the snap election. On the data front, German annual CPI slowed by more than expected in Jun while US ISM Mfg was sub-50 for a third straight month and the prices paid component slowed sharply
* Stoxx600 opened 1.12% firmer but gains shrank to as little as 0.25%
* Govvies: EGB yields were set to end the session sharply higher across the board, led by Germany
- EC Jun F HCOB Manufacturing PMI revised up to 45.8 (flash 45.6)
- GE Jun P CPI YoY slowed to 2.2% (exp 2.3%, prev 2.4%)
- US Jun ISM Manufacturing missed at 48.5 (exp 49.1, prev 48.7), Prices Paid below f/c at 52.1 (exp 55.9, prev 57.0)
What to watch Tuesday
** Key Data: UK Jun BRC Shop Price Index (00:01), SP Jun Unemployment Change (08:00), IT May Unemployment Rate (09:00), EC Jun P CPI MoM (10:00), EC Jun P CPI Core (10:00), EC May Unemployment Rate (10:00), US May JOLTS Job Openings (15:00)
** Key Events: ECB Forum on Central Banking in Sintra - ECB's Guindos, Elderson, Schnabel all chairing various Panels whilst Powell, Lagarde and Neto are also scheduled to speak (14:30)
** Government Auctions: Japan to sell JPY2,600bn 10yr bonds (04:35), UK to sell GBP4bn 2027 bonds (10:00), Germany to sell EUR1bn of 2030 green and 2050 green bonds (10:30)
All times BST
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