DAILY CLOSE: Record UK deal stands out in SSA-centric session
** After just two days the weekly euro IG supply total already stands at EUR44.8bn and within touching distance of the average EUR52bn supply forecast given in our most recent issuance poll. That as jumbo SSA trades from The European Union (EUR11bn Dec 2031 vanilla and Feb 2050 green taps) and Italy (EUR13bn Oct 2040 BTP) did the heavy lifting in an overall EUR31.5bn euro day Tuesday, whilst France is set to pick up the sovereign baton Wednesday with a EUR May 2056 OAT. Financials were also active in euros on Tuesday, but IG corporate were conspicuous by their absence, with full details in IGM's DAILY EUR NICS & BOOKS. SSA headlines weren’t just limited to the euro market Tuesday, as The United Kingdom broke records with a GBP13bn Mar 2035 Gilt. See the IGM DAILY GBP NICS & BOOKS
** In the SSA space the United Kingdom shattered records with its largest-ever syndicated bond deal, issuing a new GBP13bn 10yr gilt that drew an unprecedented GBP140bn order book, including GBP12bn of JLM interest. Meanwhile, The Republic of Italy successfully placed a new 15yr BTP, attracting EUR133bn in orders, reflecting strong demand for long-dated euro sovereign paper although the final cover ratio was back in line (slightly above the average 9x going back to 2020) with longer-term averages after the issuer pushed the deal size to a whopping EUR13bn (matching the size of the 10yr deal placed a few weeks ago). Some recent Italy deals have seen exorbitant cover figures including a 33.67x cover for a EUR3bn tap of an Oct 2054 line completed in Oct 2024. Dexia SA priced a EUR1.75bn long 3yr bond in line with fair value, securing a EUR2.8bn order book. Its deals have been sized between EUR1.5bn and 2bn going back well into the last decade with an average of EUR1.769bn. Since 2020 the issuer has launched just one deal per calendar year meaning this may very well be its only outing of the year. The European Union surprised markets with a larger-than-expected EUR11bn dual-tranche tap, exceeding the EUR9bn that we anticipated at least. The transaction comprised EUR6bn of Dec 2031 bonds and EUR5bn of Feb 2050 green bonds. Orders peaked at EUR156bn but finalised at EUR145bn with all of the refinement from peak occurring in relation to the longer green line (EU69bn down from EUR80bn). The day’s deals underscore investor appetite for high-quality European (and UK) sovereign and quasi-sovereign issuance, with demand far outstripping supply across issuers and maturities. That said the book attrition witnessed on the Feb 2050 green should be a reminder that investors still exhibit price sensitivity that needs to be accounted for. See IGM's SSA SNAPSHOT
** In non-covered FIG, the pace remained high with five raising EUR4bn via euro deals alone into books last touted at EUR12.5bn. Added to Monday’s EUR5.25bn that already takes the week to EUR9.25bn and very close to the EUR9.5bn average guess. In the senior space came Investec plc (EUR500m 6NC5 holdco senior), Raiffeisen Bank International AG (EUR500m 7NC6 senior pref), Ayvens (EUR500m 2.75yr FRN & EUR500m 5yr FXD senior Pref) while going head-to-head with Tier 2s were Ibercaja Banco (EUR500m 11.5NC6.5) and BNP Paribas SA (EUR1.5bn 12NC7)
** Covered supply ticked over Tuesday as two emerged after recent mandates to print EUR1.1bn and back up Monday’s EUR1.75bn 7yr line from CRH which marked the sector’s single largest tranche year-to-date. Providing Tuesday’s focus was Sparebanken Soer Boligkreditt AS (EUR500m no grow 6yr green Norwegian residential mortgages covered) and TSB Bank plc (EUR600m from benchmark 5yr UK regulated covered), which both printed with low-single digits NICs on the back of books that finished up at EUR1.8bn and EUR1.25bn respectively. More supply is on the way in the near future as Oberbank AG (EUR250m no grow 10yr) and UniCredit Bank GmbH (5yr benchmark) both hired leads for Hypothekenpfandbrief issues
** Whilst all other asset classes saw fresh paper on Tuesday, IG corporates decided to stay away despite what remained an accommodative broader market backdrop and the strong performance from Monday’s issuers. As a reminder, the first session of the week saw EUR4.8bn price via four issuers (six tranches) on demand that peaked at EUR19.9bn before settling at a more restrained EUR11.65bn after the final NICs ranged from -2bps to +3bps. Whilst we were without supply Tuesday, we shouldn’t have to wait too long until we get back up and running, with Fastighets AB Balder (EUR500m no grow 7yr) and Barry Callebaut (EUR 3/6.25yr two-part) both wrapping up a series of calls ahead of a launch as soon as Wednesday. See the IGM CORP SNAPSHOT
Wednesday's primary prospects
SSA:
** The Republic of France (Aa3/AA-/AA-) mandated BNP Paribas, Citi, Deutsche Bank, J.P. Morgan and Societe Generale to act as Joint Lead Managers on an upcoming new 30yr OAT benchmark, due May 2056
** Investitionsbank Schleswig-Holstein (AAA) mandated Bankhaus Metzler, DekaBank, Deutsche Bank, LBBW and NORD/LB as joint lead managers for its upcoming EUR500m no grow 10yr transaction
Covered:
** UniCredit Bank GmbH has mandated BayernLB, Danske Bank, DZ BANK, Helaba, NORD/LB, Raiffeisen Bank International and UniCredit to joint lead manage its upcoming EUR 5yr Mortgage Covered Bond (Hypothekenpfandbrief) benchmark transaction. The deal is expected to be rated Aaa by Moody’s
** Oberbank AG (hired ABN AMRO, Danske Bank, Erste Group und NORD/LB as Joint Bookrunners for a new EUR250m no grow 10yr fixed-rate Mortgage Covered Bond (Hypothekenpfandbrief). The issue is expected to be rated AAA (S&P)
Corp:
** Nordic property company Fastighets AB Balder (BBB) this morning asked Danske Bank, Deutsche Bank, Nordea, Nykredit and SEB to lead manage a series of calls on 11-Feb ahead of a EUR500m no grow 7yr offering
** Swiss-Belgian company Barry Callebaut (Baa3/BBB-), the world’s leading manufacturer of high-quality chocolate and cocoa products, mandated ING, Rabobank, Societe Generale and UBS to act as Joint Bookrunners to arrange a series of fixed income investor calls taking place 10-11 Feb. A EUR 3yr and 6.5yr two-part benchmark transaction issued by Barry Callebaut Services NV is expected to 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
Tuesday's broader market developments
** European stocks traded sidewards Tuesday with little in the way of fresh impulses to move the needle. The confirmation of 25% tariffs on steel and aluminium imports from US President Trump and pledge of countermeasures from the EU continued to support gold though with the spot price jumping to a fresh record high above USD2,942 on the day, leaving bulls targeting the psychological 3k level. US stocks opened lower ahead Fed chief Powell starting two days of testimony in Congress on Tuesday and the key US CPI print Wednesday
** Stoxx600 traded in a narrow +0.21%/-0.15% range. Gains in Tech countered losses in Materials and Real Estate
** Govvies: EGB yields rise as the day progresses, set to end the session 4-9bps higher across all tenors and jurisdictions, led by the longer-end
** Data:
- FR Q4 ILO Unemployment Rate lower than exp at 7.3% (f/c 7.5%, prev 7.4%)
- US Jan NFIB Small Business Optimism missed at 102.8 (f/c 104.7, prev 105.1)
What to watch Wednesday – US CPI
** Key Data: IT Dec Industrial Production (09:00), US Weekly MBA Mortgage Applications (12:00) and US Jan CPI (13:30)
** Key Events: ECB’s Elderson (10:00) and Nagel (17:00), BoE’s Greene (15:00), as well as Fed’s Powell (15:00), Bostic (17:00) and Waller (22:05) speak
** Auctions: UK to sell GBP1bn 2045 Linkers (10:00), GE to sell EUR2.5bn 2050 & 2054 Bunds (10:30), PO to sell EUR1.25-1.5bn 2034, 2042 & 2052 PGBs (10:30) and US to sell USD42bn 10yr Notes (18:00)
** Earnings: 22 Stoxx600 & 22 S&P500 companies release results
All times GMT
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