SSAs disappoint in weaker euro market

The enthusiasm of the new year is already wearing off in the sovereign, supranational and agency market with issuers having to pay more than expected and books smaller than had been hoped for. Nederlandse Waterschapsbank was first out of the blocks with a Eu1bn three year and although the book was only just oversubscribed, the deal priced at the tight end of the 65bp-70bp guidance. EIB’s new five year Earn underwhelmed slightly with a book of only Eu3.6bn for a Eu3bn deal, despite pricing of mid-swaps plus 20bp. And KfW’s 10 year also emerged as Eu3bn although the book reached Eu5.6bn, suggesting that around Eu2bn of orders were wider than the 37bp pricing. ICO struggled to raise Eu1bn for its five year bond as Spain’s triple-A rating was put on negative outlook. The pricing also had to be widened from initial guidance of mid-swaps plus 45bp-50bp to plus 60bp. Belgium’s 10 year syndicated OLO was launched for Eu4bn and priced at plus 50bp compared to guidance of 45bp-50bp. Baden Wuerttemburg will price a two tranche benchmark later today – the five year segment at mid-swaps plus 35bp area and the 10 year at plus 45bp. Books had reached around Eu2bn and Eu1bn respectively by mid-morning.