Last Friday?s non-farm payroll figures from the US confirmed the market?s expectations of a rate rise at the FOMC meeting at the end of the month, thereby lending the market stability.
This provided an ideal springboard for the European Investment Bank (EIB) to move quickly to launch a $3bn two year global bond and tap into strong demand for defensive instruments. This appetite had been further boosted by the back-up in yields at the short end, which made a 3% coupon possible.
Eksportfinans was able to make a successful debut in global format, its $1bn five year deal finding strong support in both the US and Asia.
However, with the background of a bear flattening of the curve, heavy supply in the five year maturity in euros struggled. Cades was forced to revise price guidance on its first nominal benchmark for five years, but at the new level could comfortably place its Eu3bn target.
The economic recovery prompting expectations of interest rate rises has helped the corporate bond market on to a surer footing.
LVMH is set to overtake Gecina in a week curtailed by the Corpus Christi holiday yesterday (Thursday) and the US holiday for President Reagan?s funeral today. The LVMH book reached Eu900m for a minimum Eu500m seven year bond that will be priced today at mid-swaps plus 55bp area.
French property company Gecina will be next week?s business. Its Eu500m January 2012 offering has been delayed until next week after investors called for a change of control covenant.
Air Liquide will launch its Eu1bn offering in six and 10 years next week, while Cadbury Schweppes will roadshow its debut benchmark in euros on June 15 and 16.
In high yield, investors are considering Kabel Deutschland?s Eu700m deal, which may be priced as early as next week, when the US leg of its roadshow ends.
The pipeline is beginning to build again as the market stabilises, with UK-Dutch steelmaker Corus rumoured to be considering a return, having cancelled a Eu500m seven year deal that was due to be launched on May 14.
German auto equipment supplier Dürr has mandated Deutsche Bank and LBBW to lead manage a Eu200m bond. The likely seven to 10 year issue is expected before July.
The financial sector had one of its best weeks this year as the strong bid for both bank capital and senior deals continued. Both tranches on NAB?s lower tier two issue were oversubscribed, enabling pricing at the tight end of talk, and the $750m tier one Yankee deal for Danske Bank drew a book of $4bn.
Sanpaolo IMI did some opportunistic pre-funding with its lower tier two issue and was not disappointed by a twice oversubscribed book that allowed pricing at the tight end of guidance.
Anglo Irish Bank is expected to price its lower tier two benchmark next week, while EFG Eurobank?s Eu300m deal of the same format is also expected.
