Leads Deutsche Bank, HSBC and JP Morgan priced KfW's €5bn March 2027 benchmark at 10bp through mid-swaps, 2bp inside guidance. The final book was €11.5bn, excluding lead manager interest.
“Looks like a blowout,” said a syndicate banker away from the deal. “This is the sweet spot. Investors are keen on something between seven and 10 years at the moment.”
Despite the negative yields in this maturity range, investors were attracted to the relative value KfW offered versus other government bonds and Eonia, according to SSA bankers.
KfW is the third public sector borrower to have sold a seven year euro bond this week, after Lower Saxony and the Japan Finance Organisation for Municipalities.
ESM is expected to follow with a similar maturity for its first benchmark of the year, scheduled for next week.
In its RFP, it said it wanted to issue a bond with a maturity of up to 10 years, according to a syndicate banker.
ESM has slightly increased its programme from 2019 since some bill obligations have been transferred to its bond funding programme. It needs to borrow €11bn this year and has set a €5bn target for the first quarter.
