Printing while yields are at their lowest makes sense for any borrower, but there is another big factor for those in the SSA market — the ever dwindling issuance windows on offer.
Despite being very well funded for the year, SSAs still have much to do. But the risk event calendar is chock-a-block. There is not only the ECB’s next meeting (or if it does its usual can kicking, the ones after that) but also the Korean threat, as well as Federal Reserve balance sheet normalisation, a German election, the US debt ceiling and some worrying political noises from Italy.
We’ve so far avoided any collisions in the post-summer rush, but there are rumours that some issuers have had to step aside to let others through — and not always without a little grumbling.
Unfortunately, that looks to be the lie of the land for the foreseeable future.
SSAs’ funding needs are still well above their pre-crisis highs, while in dollars there seems little appetite for anything beyond the five year part of the curve — blame the deflating ‘Trump trade’ for that — meaning borrowers wanting to print in the currency will have to cram into the very short end.
That means issuers must be more flexible than ever. Opportunistic trades, a healthy dose of private placements and eternal vigilance are the answers — but a clash sooner or later seems inevitable.