Supply from other core European issuers looks limited this week, as issuers await the start of SSA quantitative easing by the European Central Bank and the end of holidays in Asia.
Leads Crédit Agricole, Credit Suisse, Nomura and Standard Chartered priced a €400m tap of the EIB’s November 2019 Climate Awareness Bond at mid-swaps minus 30bp on Monday. The spread equated to a reoffer yield of minus 0.026%.
SSA syndicate officials at two of the leads said it was the first time they had seen a green bond offer a negative return in the primary market.
“It’s breaking new ground,” said one of the syndicate officials. “It had a spread of 9.9bp over Bunds so it was already a pretty impressive price for the issuer to get.”
The spread was in line with EIB’s conventional Ecoop curve, however, so the pricing was more a function of the wider market, he said.
“The slant with the green angle helped demand,” the official said. “It’s an aggressively priced trade but it’s fair to everything else in that part of the curve.”
A syndicate official at another lead said that the deal followed reverse enquiries about the bond.
The November 2019 was already the largest outstanding green bond in the market and the tap takes its size to €3bn.
Quiet times
The City State of Bremen mandated Bayern LB, Deutsche Bank, Goldman Sachs, LBBW and Nordea on Monday to run a €500m 10 year bond, which is likely to come on Tuesday.
Aside from that, supply is likely to be limited until Wednesday, when Asian investors come back from holiday. Many non-sovereign issuers are also waiting until the ECB launches its QE programme next month before coming with new deals, said an SSA DCM head.
