DAILY CLOSE: Weekly supply rises as ECB easing bets build
** The week ended on a 'go-slow' as just EUR50m was issued via a 5yr T3 from previously pipelined Pozavarovalnica Sava. Friday’s sole deal meant that a combined 62 tranches priced in the single currency this week, the third most of any week in 2024. In total EUR44.25bn (all asset classes) was priced, up from the previous week’s EUR25.01bn, with a lack of key central bank verdicts and an upbeat tone leaving the issuance window wide open. This week’s haul (ex-HY corps) finished up at EUR42.5bn. IG corps marginally led the way this week with EUR14bn, followed by SSAs at EUR12.9bn and non-covered FIG at EUR9.95bn. For the full breakdown of this week’s single currency issuance by asset class and maturity see IGM's WEEKLY VOLUME
** A host of IG corporate issuers jumped through the issuance window, resulting in the sector seeing its third biggest euro volume week of 2024. The final total finished up at EUR14bn courtesy of 23 separate tranches from 16 names, which was up from the EUR5.85bn (11 lines) last week. In terms of this year, the only weeks to see more single currency corporate supply were the w/e 30-Aug (EUR19.65bn) and 17-May (EUR24.15bn). Combined orders for the paper finished up at an impressive looking EUR39.195bn, although there were perhaps some signs of investor indigestion with us seeing the lowest average spread compression (-27.56bps) and highest NIC (5.3bps) of any September week. See IGM's CORP WEEKLY
** In euros the week’s SSA issuance was crammed into the first 3 days, with 11 lines (9 issuers) pricing for a total of EUR12.9bn (incl EUR2bn from China). NICs were notably higher for LSA issuance (Hesse and Hamburg both left 4-5bp) whilst on the demand side Spain’s 12yr linker (EUR4bn) topped EUR50bn and the People’s Republic of China (via its Ministry of Finance) utilised a robust order book to price 3 and 7yr lines well through fair value (-15bp and -20bp NICs). The dollar market saw European activity from KfW, BNG Bank and KBN with low NICs exhibited across the board from the trio whilst Canadian pension issuer PSP Capital appeared to adopt a more pragmatic approach with a USD1.25bn 5yr deal that priced with a c.4bp NIC. See IGM's SSA WEEKLY
** In non-covered FIG, the final full week of September surprised almost everyone where issuers raised a total EUR9.95bn via single currency deals. That was above last week’s EUR7.6bn total and the EUR8bn average forecast while also coming tantalisingly close to the EUR10bn highest guess. If it felt busier than the headline number suggests, that could be because of the relatively high number of tranches this week (17), and modest average deal size (EUR585m). In keeping with the experience of issuers for much of this year, the was no shortage of buyers for this week’s deals where final combined order books totalled EUR26.83bn for the EUR9.95bn total amount priced. See IGM's FIG WEEKLY
** The covered market saw seven euro-denominated transactions raise a combined EUR5.65bn total, surpassing the initial EUR2bn average estimate for this week. This was chased by final orders of EUR9.11bn+ and offered borrowers an average 1.75x cover. Between the transactions, Coventry Building Society’s Oct 2029 was the most sought after by investors, having garnered enough orders to cover the deal 2.8x. DKB’s 2034 was close behind with a registered 2.2x oversubscription. This activity takes the YTD sum to EUR144.85bn. See IGM's COVERED WEEKLY
** Nearly EUR11bn worth of ESG supply was sold this week with all formats, currencies and asset classes represented. The week’s highlights include CAFFIL’s social OF - the week’s largest transaction; and IdF Mobilites which secured the largest cover ratio among the week’s ESG transactions. See IGM’s Europe Credit ESG Weekly (w/e 27-Sep-2024)
** Supply will slow in the coming sessions - according to the results of our survey - after this week’s final supply landed closer to the higher range of estimates. EUR22.5bn has been forecast by our respondents and SSAs are largely anticipated to lead volumes. See IGM’s Euro Issuance Estimates (w/c 30-Sep-2024)
IGM Credit Excel spreadsheets and reports
** 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
** The IGM European Weekly Cheat Sheet provides proprietary intelligence on Euro primary market trends using various key data points in an easily digestible Excel spreadsheet. This includes Euro new issue volumes, average new issue concessions and book cover ratios across asset classes, as well as other key credit proxies
** 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
IGM's legal notices
This week's tender announcements include Hammerson (XS0184639895, XS0085732716+) and Fibabanka (XS1386178237).
This week's consent announcements include Orange (USF4113CDJ92).
You can find these and more on IGM's Legal Notices story look-up function, where clients can access announcements on tenders, consents, exchanges and stabilisation notices.
For IGM's Legal Notices click here.
Friday's broader market developments
** Stoxx600 joined a growing list of indices to have notched up a record high this week. Followed another strong session in Asia where Hang Seng and CSI300 closed out the week with jumbo gains of 13.0% & 15.7% as this week's China stimulus blitz drove FOMO and weak China Industrial Profits (down 17.8% YoY in August from +4.1% in July) underlined the need for PBoC easing. French and Spanish inflation moderated sharply in Sep while ECB 1- and 3-yr CPI expectations eased in Aug. With that, ECB easing bets took another jump higher with the probability of a 25bps cut in October rising above 80% (BBG data), up from 25% at the start of the week. US PCE data also cemented another cut by the Fed at its next meeting but a 25bps or 50bps move is still a close call
** Stoxx600 +0.58% at best (led by Consumer Discretionary, again)
** Govvies: Yields lower across the board as soft FR/SP inflation data bolsters bond bulls. Italy sold the max EUR8.75bn of conventional and FRN bonds
** Data:
- CH Aug Industrial Profits YoY at -17.8% (prev 4.1%)
- FR Aug Consumer Spending MoM above f/c at 0.2% (exp -0.1%, prev rev to 0.2%)
- FR Sep P CPI YoY (EU) below f/c at 1.5% (exp 1.9%, prev 2.2%)
- SP Sep P CPI YoY (EU) below f/c at 1.7% (exp 1.9%, prev 2.4%)
- GE Sep Unemployment Change above f/c at 17k (exp 13.5k, prev rev to 4k)
- US Aug Core PCE Price Index YoY matched f/c at 2.7% (prev 2.6%)
What to watch Monday (and for the week)
** Key Data: JN Aug P Industrial Production (00:50), JN Aug Retail Sales (00:50), CH Sep Manufacturing/Non-Manufacturing PMIs (02:30), CH Sep Caixin Composite/Services PMI (02:45), GE Aug Import Price Index (07:00), UK Sep Nationwide House Prices (07:00), UK Q2 F GDP (07:00), UK Q2 Imports/Exports (07:00), UK Aug Mortgage Approvals (09:30), UK Aug M4 Money Supply (09:30), IT Sep P CPI (10:00), GE Sep P CPI (13:00), US Sep MNI Chicago PMI (14:45) and US Sep Dallas Fed Manufacturing Activity (15:30)
** Key Events: No key events scheduled for Monday 30th Sep
** Auctions: ECB’s Lagarde (14:00), Fed’s Powell (18:00) and BoE’s Greene (21:10) speak
** Viewpoint - The week ahead:
- US August JOLTs (Tuesday), September ADP (Wednesday), September Employment report (Friday).
- Riksbank minutes (Tuesday). BoE DMP (Thursday).
- German/Italian (Monday), EMU (Tuesday) August prelim CPI. EMU August PPI (Thursday).
- EMU/Italy unemployment rate, Spain September unemployment change (Wednesday).
- UK Aug mtg approvals/mtg lending/consumer credit/effective rates (Mon). Sep BRC shop prices (Tue)
- Japan August prelim IP & retail sales (Monday). August jobless rate & Q3 Tankan (Tuesday).
All times BST
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