DAILY CLOSE: Primary market back in action
** The European bond market awoke from its summer slumber on Monday, with all asset classes seeing fresh single currency supply after what was the slowest week of the year last week. A quintet of issuers raised a total EUR6.3bn as market participation picked back up following vacations, with that total more than the EUR2.5bn to have priced in the previous two-weeks combined. For the full pricing metrics on Monday’s single currency trades see the IGM DAILY EUR NICS & BOOKS. Alongside the euro activity we had a couple of SSA names tap the sterling market (KfW & OKB), with details in IGM’s DAILY GBP NICS & BOOKS. The recovery in activity is set to continue on Tuesday too with a handful having already mandated deals and another load said to be looking in the background
** IG corporates were most active in euros at the start of the week, as both Amprion (EUR500m 6yr / EUR600m 15yr green) and Volvo Treasury (EUR700m 3yr / EUR500m 5yr vanilla) issued their second dual-tranches deals of 2024. The pair received a strong response from investors, with combined demand coming in at EUR7.55bn, having earlier peaked at EUR8.6bn. EUR3.9bn (EUR4.7bn peak) of that came for German transmission system operator Amprion’s green bonds which landed with NICs of 5bps on the 6yr and zero on the 15yr. Volvo Treasury AB (publ), the financial arm of Swedish automaker AB Volvo, saw slightly smaller books of EUR3.65bn (EUR3.9bn peak) with NICs of 2bps and 5bps on the 3yr and 5yr lines respectively. Monday’s duo printed after just EUR7.85bn of euro corporate supply priced in the last five-weeks combined, with some predicting we could see more than that price this week alone as more line up trades. See the IGM CORP SNAPSHOT for more details
** In non-covered FIG, the honour of delivering the first euro supply since 1st August fell to National champion ING Groep who reopened the market with a EUR1.25bn (from benchmark) 11NC6 Tier 2 that drew in a EUR4.5bn peak (and final) book to land with a single-digit NIC. That tops the EUR3.2bn order book seen for ING’s prior Tier 2 in May (EUR1.25bn 10.25NC5.25) and also the EUR3.25bn book for the most recent Tier 2 sale held on 1st August by CaixaBank. That sends a clear message that supply starved investors have both the cash and appetite to support the right trade and it seems logical to expect more issuers to follow suit in coming days. ING’s trade builds on 2024’s already bumper Tier 2 haul from banks which now stands at EUR27.88bn compared to 2023’s full year total of EUR19.63bn. See IGM’s FIG SNAPSHOT
** Following a more than two-week long pause, covered activity returned to the single market on Monday with Commerzbank AG issuing a EUR1.25bn Sep 2029 HP. The 5yr line garnered a strong level of demand throughout execution, with orders peaking at EUR2.4bn+ before dipping slightly to EUR2.2bn+ (1.76x cover). That after a 5bp refinement from m/s +30 area guidance (final 1bp NIC). On the day, Berlin Hyp also emerged to add an upcoming EUR500m no grow 7yr social CB to the pipeline
** It turned out to be the most active day in weeks for SSA new issuance with 3 deals getting over the line and several more mandates (EUR and USD) added to the pipeline. Pricing in the single currency was State of Hesse with a new 10yr LSA at m/s +20 (1bp inside IPTs) with what looked to be a 2bp NIC. That coincided neatly with the concession on last week's MECVOR 9yr although Monday's deal achieved a markedly larger absolute orderbook of EUR1.65bn (versus EUR450m) which was almost fully utilised after the deal was sized at EUR1.5bn. In sterling, KfW joined Oesterreichische Kontrollbank to raise GBP300m apiece with the German stalwart increasing an existing Feb 2026 line whilst the Austrian issuer brought a new short 5yr deal. Both deals (as is often the case with small GBP denominated trades) priced in line with IPTs (at UKT +60 and SONIA m/s +34 respectively) with KfW notably reverting back to quoting a spread over UKT and in line with the convention used to price the original deal (UKT +81 in Jan 2023). The Republic of Finland will headline proceedings in EUR on Tuesday with a long 5yr already lined up alongside a new 7yr sustainability from the World Bank (IBRD) and a new 10yr social from Dutch issuer BNG Bank. For context, average August issuance in euros comes out at just shy of EUR15bn (since 2010) with just EUR2bn having priced so far in the month. The mini flurry of mandates, from high profile issuers, will certainly help to push us towards the multi-year average and if it continues could see us eyeing up the EUR30.475bn that surfaced in 2022 after KfW kick-started the market with a benchmark transaction on 17th August. In dollars the EIB mandated for a new 5yr (IPTs at SOFR m/s +40 area) after earlier in the day the Development Bank of Japan had set out its stall to sell a new 3yr sustainability line. With a mandate announcement that came almost 3 hours after its EUR deal first hit screens, World Bank (IBRD) added a dual-tranche 2yr and 10yr (Aug maturities) to Tuesday's line up. See IGM's SSA SNAPSHOT
Tuesday's primary prospects
SSA:
** The Republic of Finland (AA+/AA+) mandated BofA Securities, Citi, Danske Bank, Deutsche Bank and J.P. Morgan to lead manage its forthcoming EUR long 5yr benchmark transaction. The deal will have a Apr 2030 maturity
** BNG Bank N.V (Aaa/AAA/AAA) hired Citi, Goldman Sachs Bank Europe SE, Societe Generale and TD Securities to lead manage a new EUR 10yr social benchmark
** World Bank (IBRD), rated Aaa/AAA, hired BofA Securities, Deutsche Bank, Goldman Sachs International and Natixis to lead manage a new EUR 7yr fixed rate benchmark sustainable development bond
** World Bank (IBRD), rated Aaa/AAA, has also mandated Barclays BMO, Citi and HSBC as bookrunners on a USD 2yr and 10yr global two-part sustainable benchmark. IPTs at SOFR m/s +30 area and +58 area respectively
** European Investment Bank (Aaa/AAA/AAA) is taking IoIs for a USD Nov 2029 global benchmark at SOFR m/s +40 area IPTs via J.P. Morgan, RBC Capital Markets and TD Securities
** Development Bank of Japan Inc (A1/A) is working a USD 3yr sustainability bond at SOFR m/s +55 area IPTs via Goldman Sachs, Citi, Morgan Stanley and Nomura
Covered:
** Berlin Hyp AG mandated DekaBank, Erste Group, HSBC, LBBW and UniCredit to lead manage its forthcoming EUR500mn no grow 7yr Social Mortgage Covered Bond. The issue is expected to be rated Aaa by Moody's
** Bendigo and Adelaide Bank Limited (A-/A-/Baa1) hired Barclays, Natixis and UBS Investment Bank on a EUR Long 5y Reg S (Bearer form) Soft Bullet Covered Bond transaction, backed by prime Australian residential mortgages. The Covered Bond is guaranteed by Perpetual Corporate Trust Limited and is expected to be rated AAA/Aaa
** 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 - Path of least resistance still higher for EU stocks
** EU stocks built on last week’s impressive gains as thoughts turned increasingly to looming key events (Fed minutes Wed, Jackson Hole from Thu). S&P500 and Nasdaq were attempting to make it eight straight wins in a row with the former getting to within just 1.8% of its record high
** Stoxx600 +0.57% at best. Consumer Discretionary and Real Estate led gains with index hitting a fresh multi-week high
** Govvies: No overall direction with an early dip in yields reversed
What to watch Tuesday
** Key Data: GE Jul PPI (07:00), EC Jul F CPI (10:00) and US Aug Philly Fed Non-Manufacturing Activity (13:30)
** Key Events: China 1-year & 5-year Loan Prime Rate (02:00), Fed’s Bostic (18:35) and Barr (19:45) speak
** Auctions: GE to sell EUR1.5bn of 2033 & 2050 Bunds (10:00)
** Earnings: 7 Stoxx600 & 4 S&P500 companies release results
All times BST
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