Are you a European sovereign feeling let down by the single currency? Are you one of the many ministry of finance officials around the EU who has spent the last 18 months longing for a time machine? Have you experienced homicidal tendencies towards the people who originally came up with the idea of monetary union?
Do not fret. The Swiss franc market is on hand to ease your pain.
With smaller euro area sovereigns struggling to compete in the euro market’s unfriendly waters, the Swiss franc sector has proven to be a perfect funding platform for countries that gave up their own currencies in 2002 to embark on an expedition towards economic and political prestige — only to find their caravels were missing helms.
Swiss investors are verging on low yield-induced nervous breakdowns and are laying their hands on any reasonably safe spread product they can find. These days, the once conservative Swiss buyer base is looking for action — and wants fresh names above all.
Slovakia swallowed some Swissie medicine this year and was envigorated by the results. It priced a Sfr425m dual tranche debut in March through its euro levels, which have frustratingly been failing to keep track with Slovakia’s strong macro improvements. Daniel Bytcanek, director of the Debt and Liquidity Management Agency of Slovakia, laments that investors buying Slovakia now factor in the eurozone, overlooking the improvement in the country's fundamentals.
Poland — a far more established Swiss franc issuer, with Sfr6.025bn outstanding — last week grabbed this year’s positive momentum behind eastern European sovereigns and followed Slovakia into the Swiss franc market with an absolute blow-out. It priced an Sfr825m double trancher that surprised the entire sector, issuer and lead managers included. It was the largest international Swiss franc transaction since 2009.
Others would be sensible to join in. Market participants reckon the Czech Republic, which has issued only one Sfr500m note, in 2009, is the next natural candidate for a dose of the Swiss drug. Slovenia is also looking closely at the market — its interest in a Swiss franc debut might have been strengthened by a less than fruitful euro roadshow in late March.
Before everyone gets too excited, though, a word of caution. This medicine has not been tested on top-rated EU sovereigns and may not be suitable. Adverse reactions could include — but not be limited to — a hammering of your secondary spreads. Please read the relevant information and alert your lead managers if you have never taken this medication before. Patients may be required to roadshow before prescription. Good luck.