SSA issuers did not miss a beat on Monday, building on the supply rush from last week by announcing deals in euros and dollars.
Leading the cohort was Italy. The sovereign is set to price a new May 2039 BTP€i, indexed to eurozone HICP ex-tobacco, on Tuesday. The deal will be lead-managed by Barclays, Citi, Deutsche Bank, JP Morgan and Société Générale.
Italy last brought a syndicated public new issue in April, coming with a €10bn 4% October 2031 green trade that attracted €52.9bn of demand.
According to the Italian Ministry of Economy and Finance’s 2023 public debt management guidelines, total gross issues of medium to long term securities are expected to be €310bn-€320bn. Financing needs will be determined by maturities of outstanding securities, it said. This year, two five and 15 year BTP€i securities are set to mature.
“This inflation-linked bond from Italy had been pretty well expected by the market,” said a banker close to the mandate. “They’re part of a small group of linker issuers together with France. The key question for these issuers is around which window is right to take.”
The inflation market has been a little less volatile compared to previous weeks, according to the banker, who added that there is still a “threat” caused by debt ceiling discussions in the US.
“But this is more of a technical product and there’s still a bit of time before that deadline so there’s a good window here,” he said.
While euro government bond yields have been rising overall, the "risk tone" has improved since concerns over US regional banks have subsided somewhat, he added. “Since then, markets have been a bit more optimistic.
“Yields [on the inflation swap curve] are still relatively contained compared to headline inflation numbers. That’s optimistic and demonstrates that the market believes the central banks will be successful in stopping inflation."
Small names
With some of the larger SSA names like KfW, the European Investment Bank and the European Union having brought deals to the market last week, the next few days might “leave the stage free” for some smaller issuers, according to a second banker.
“We already have Caisse des Dépôts et Consignations on screen and NWB Bank in dollars,” he said on Monday morning. “A busy week is expected. Summer is approaching and some will try to get something done before they leave the desk."
Tokyo was the first to mandate in dollars on Monday morning. After bookrunners Goldman Sachs, Barclays, Morgan Stanley and Citi hosted a series of fixed income investor calls in the US, Europe, Middle East and Africa, and Asia where a maturity of between three and five years was floated, a new $500m no grow June 2026 trade was announced.
Initial price thoughts are in the 90bp over Sofr mid-swaps area.
Also out in dollars is NWB Bank. The Dutch agency will raise $1bn via a no-grow June 2028 line for which initial price thoughts are in the 47bp over Sofr mid-swaps area. It has hired Barclays, BNP Paribas, Canadian Imperial Bank of Commerce and Citi to run books.
Busy euros
The euro market is looking even busier. NRW.Bank has hired Barclays, Crédit Agricole, DekaBank and Deutsche Bank for an upcoming €1bn seven year green bond while the State of Brandenburg is set to issue a €500m floating rate four year trade to be lead managed by DekaBank, LBBW, Nord/LB and UniCredit.
French agencies are also set to return, with Caisse des depots et consignations and Agence Francaise de Developpement set to bring €500m no grow five year sustainability benchmark and May 2033 benchmarks respectively.
The former has hired BNP Paribas, Crédit Agricole, Deutsche Bank, J.P. Morgan and La Banque Postale while the latter Crédit Agricole, Deutsche Bank, HSBC, Morgan Stanley and Natixis.
An onlooking SSA banker said it was the “logical window” for French names given the relatively clear period without an auction in France.
