The European Union, which has blossomed into the most influential SSA issuer by dint of its huge borrowing programme, now bears the task of reopening the SSA market when it is going through tough times — such as following the collapse of Silicon Valley Bank and Credit Suisse in recent weeks.
It did so this week with a triumphant €6bn tap of a 2.625% 2048 green bond that paid around 2bp of new issue premium, summoning €73bn of orders in the process. Crisis? What crisis?
That the job of setting the tone in the SSA market fell to the EU was partly thanks also to timing. A deal from the EU had long been slated for early part of this week, making it an easy decision for other public sector issuers to wait and see how investors would behave after the recent period of volatility.
The EU's success opened the floodgates as a number of issuers poured into the primary market in the immediate aftermath of the deal.
But maybe they inferred too much of a boost from the bellwether bloc borrower. Some SSA bankers concluded that that other issuers might had got carried away with their own trades and been too ambitious. None of the follow-on deals managed the sort of reception that greeted the EU.
This is because while the EU is certainly something of a supertanker in the SSA market, around which smaller craft must navigate, it is very much its own beast, given its credit profile and the pricing it offers versus Bunds, as well as the abundance of liquidity in its paper compared to many agencies.
For although the EU's deal was a success, even it benefitted from additional green demand. Indeed, this week's syndication did not mean the SSA market has returned to health. Sentiment is fragile and inflation is sticking around despite central bank rate rises meaning the path of monetary policy is unclear.
The EU may have made waves this week but the waters of the SSA market are choppy for all sorts of other reasons.