Macron risk: a blessing in disguise
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Macron risk: a blessing in disguise

Local house of fishers in Fakarava,  Tuamotus Archipelago French Polynesia, Tuamotu Islands, South Pacific.

The SSA bond market could benefit from an early summer

French president Emmanuel Macron’s surprise decision to call snap parliamentary elections last Sunday was hardly catnip for the SSA bond market.

The resulting gyrations in government bond yields and swap rates brought what was expected to be a busy week for euro issuance to a near standstill.

The EU printed its deal as scheduled but only got €6bn done when some expected €7bn. Elsewhere, deals were below €1bn as issuers stayed on the sidelines.

While some hope for an issuance window to open before August, others fear more political flare-ups and other risks will dampen the market.

That may be a blessing.

SSA benchmark volume in euros alone is almost €380bn this year, up €50bn on the same period in 2023. There have been few slowdowns in issuance, let alone pauses, and the effects of this have started to show in the primary market.

Investorindigestion was evident even before Macron’s announcement, with order books shedding billions as issuers tightened pricing during syndication.

Issuers are keen to wrap up full-year funding before the US presidential elections on 5 November throw up market volatility.

However, an early summer lull does not mean a longer pause in supply. Previous summers have shown that investors can and will buy deals right through the season.

But having a chance to take stock and reset now, while the French sort out their parliament, could well be the fillip the SSA market needs to get everything wrapped up before November.

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