Agencies and regions dashed into the euro market on Tuesday to print deals before the European Union is due to bring a potentially market shaping test of the long end of the curve a day later.
French agency Unédic sold €1bn of 10 year debt, Finland’s Municipality Finance printed €500m of seven year bonds and Land Lower Saxony was out with a €10bn long seven year trade.
The issuers were all speeding through the market before the star of the show arrives on Wednesday, after the EU mandated for a dual tranche trade at three and thirty year maturities.
“If the long end is big and gets decent traction,” said an SSA banker in London, “then that could mean you see more people trying the longer end. Maybe not 30 years, but 20 could be on the cards.”
Rare outing
Unédic was welcomed warmly by investors for its first deal of the year, with the borrower garnering the biggest book in euros on Tuesday.
The issuer opened books on a November 2032 trade at 25bp over OATs. Barclays, Bank of America, Crédit Agricole, Deutsche Bank and Société Générale ran the transaction.
The issuer drummed up €4.2bn of demand, not including orders from the joint leads, by the time books closed 23bp tighter for a €1bn deal.
“It’s a name with a limited supply, which helps,” said a lead. “There’s a degree of pent-up demand.”
Fair value for the trade sat at 21bp-22bp over OATs, giving the deal a 1bp-2bp new issue concession.
Meanwhile, MuniFin found plenty of support for its €500m no-grow May 2029 green bond. The issuer mandated BNP Paribas, Danske Bank, NatWest Markets and SEB to run the trade.
The issuer started marketing the deal at 8bp through mid-swaps, before launching at 11bp through. Demand was €1.5bn, which includes €100m of demand from the joint lead managers.
The premium looked to be around zero, according to a banker off the trade.
Finally, the State of Lower Saxony opened books on its deal 15bp through mid-swaps and printed it at 17bp through from €2.6bn of demand. Commerzbank, Helaba, NordLB, TD Securities and UniCredit ran that trade.
Wednesday’s euro market will likely be dominated by one issuer: the EU. The borrower has hired BNP Paribas, Goldman Sachs, NatWest Markets, Nordea and UniCredit to arrange its dual tranche deal.
The first tranche is a July 2025 benchmark, but much of the market’s focus will be on the success of a tap of the EU’s 0.7% July 2051s.
“We’ll have to see what type of concession and what type of size they get,” said one syndicate banker. “If it’s sizable, there could be read across to other issuers.”
However, the banker added that demand for long maturity “varies name by name”.
Another banker said that the deal had the potential to kickstart long end transactions again. “Not everyone, but issuers with a bigger funding programme will be watching this closely.”
