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SSA WEEKLY: UK sees record demand, SFIL steps down

  • Euro-denominated issuance came out at EUR8bn, driven heavily by the new 15yr EUR6bn from the European Union. Elsewhere volumes were limited to small deal sizes from a couple of German issuers, a Canadian regional tap and a 24yr sustainability line from Ville de Paris which successfully made it over the line (unlike a proposed 5yr green from SFIL which was postponed on Friday).
  • In dollars, ADB was the only game in town with a USD1bn 4yr FRN.
  • The UK s new 10yr Gilt achieved a 10x coverage ratio after the GBP110bn order book (the largest ever for the issuer) was seen for the GBP11bn deal size (its second largest deal ever).

The week never really got going

SSA issuance was limited on Monday to an opportunistic tap from Province of British Columbia. 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).

despite the EU and UK leading the way

The European Union and the United Kingdom went head-to-head (so to speak) on Tuesday with the former coming out on top whichever way the respective deals were looked at. The UK's new 10yr gilt was sized at a whopping GBP11bn (the second largest gilt syndication ever) and priced into the largest ever order book for a GBP-denominated transaction (finalising at GBP110bn incl 9bn of JLM interest), perhaps proving that rarity value is a key component in achieving impressive order books. The issuer's new 10yr gilt was the first syndicated deal at that particular tenor (see left chart below) since May 2020. To put that into some sort of perspective the issuer had been in the syndicated capital markets on no fewer than 28 occasions since that time. All this despite the UK's less than ideal political backdrop with a snap election scheduled for 4th July. 10yr yields being at near multi-month highs will certainly have helped. Indeed, the reference bond for this week's deal, the 4.625% Jan 2034, was indicated on screens at a yield just shy of 4.29%. Final spread was unsurprisingly set at the lower end of the previously announced UKT+4-4.5bp range, implying a c1bp NIC given that the slightly longer Sept 2034 line was seen on screens in the area of UKT+2.5-3bp.

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