September was always going to be a busy month for SSAs, as borrowers seek to get their autumn funding done ahead of two events that could produce volatility in dollar and euro markets: the FOMC meeting on September 18 and the German elections on September 22.
But looking at the crop of post-summer benchmarks in both currencies, SSAs will be more tempted than ever to muscle their way in to print as soon as possible.
Issuance conditions this week look about as good as anyone could have hoped. The International Finance Corporation was busy on Tuesday pricing a five year dollar global which, at $3.5bn, is its biggest ever.
Just getting a five year done is an impressive feat given how wary dollar investors are of buying anything longer than three years. They are worried about the uncertainty over the timing and speed at which the Federal Reserve will reduce its asset purchase programme — and the consequent effects on yields.
The IFC not only got an impressively sized deal away, but it didn’t have to pay through the nose to do so. The new issue premium was about 2bp — not bad considering only two other borrowers [excluding US agencies] have managed a five year in dollars since the start of June, and both of those were undersubscribed.
The reception to euro benchmarks has been just as cheering. KfW on Tuesday was setting about a rare 10 year print with a very minimal new issue premium, while Rentenbank was set to price an oversubscribed three year at the tight end of guidance.
This all proves that investors are back after their summer breaks and ready to buy. And — even better — they’re not being unreasonable about pricing.
The coming days and weeks represent an excellent window for SSA borrowers. Funding officials just have to make sure their deal doesn’t get trampled in the stampede.