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SSAs: tight US election result ‘most dangerous’ outcome

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An inconclusive result would be far and away the worst possible outcome of next week’s US presidential election, said a head of funding at a European agency, with any repeat of the legal wrangles that followed the 2000 vote likely to fuel market volatility.

The latest poll data puts frontrunner candidates Hillary Clinton and Donald Trump about neck and neck, making a tight result a real possibility. Reports have also surfaced that both campaigners are hiring lawyers to monitor polling on election day on November 8.

“We certainly hope that, if we don’t know the final outcome straight after the day of the elections, it won’t take another six weeks before we have the final result,” said a head of funding at a European agency. “That’s the most dangerous thing about this election. It could lead to a lot of volatility.”

The official pointed to the 2000 election, when George W Bush eventually beat Al Gore. After a very narrow win in Florida on paper handed the election to Gore, there followed a month of attempted vote recounts and court squabbles before Bush was eventually declared winner in Florida and winner overall.

Most public sector borrowers are as good as finished with their funding for 2016, having early on flagged the US election as a possible disruption to their normal funding timetable.

But some still have business to do.

Bank Nederlandse Gemeenten is set to hold investors calls for what will be its first sustainability bond to be denominated in dollars. BNP Paribas, HSBC and TD Securities are running the calls for the potential Reg S/144A deal, having won the mandate on Thursday.

Investor calls, rather than a roadshow, were the preferred option due to the US election, as well as the Veterans Day holiday, all taking place next week.

The deal could come the following week, a person familiar with the trade added (further details on the potential BNG trade are available at

The European Stability Mechanism has €2bn left to raise this year and has a funding window next week, but has not sent out a request for proposals — indicating it is likely to auction rather than syndicate debt, or sit this window out.

“It was a wise decision to not send an RFP in this environment,” said a head of SSA syndicate. “With a Federal Reserve meeting on Wednesday, non-farm payrolls this Friday and the US election next week, anything we’d said in the RFP could have been wrong by the time of the deal.”

The ESM’s final window of the year falls on the week beginning November 21.

SSA bankers expect a benign outcome if Clinton is the clear winner. But if Trump wins, they expect a rally in US Treasuries and other safe haven government assets. That could be problematic for issuance, although bankers said it would not shut down the market.

“If Trump wins, US Treasuries will rally aggressively, which is a concern as we want yields higher,” said a head of SSA DCM. “The higher yielding environment we’ve been in has been better for everybody.”

That theory was in evidence this week, when developed market yields dipped following a poll that put Trump ahead for the first time in months.

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