Austria

Bank borrowers returned to a stronger euro bond market on Tuesday, but deal arrangers warned of lingering concern over rates and inflation as KBC Group struggled to draw a crowd for a long-dated offering.

Volatility subsided amid a series of public holidays in Europe on Monday, raising hopes for a busier week of bank bond supply.

Austria's Raiffeisen-Landesbank Steiermark’s issued a €500m 20 year mortgage covered bond on Tuesday that was barely subscribed and, for the first time in the covered market since September 2019, leads were unable to tighten pricing from the initial level.

UBM Development, the Austrian property company, issued last week what it believes is the eurozone’s first sustainability-linked retail bond — bringing one of the hottest techniques in corporate finance to a traditional market that has dwindled in the recent climate of negative interest rates.

Shares in Montana Aerospace, the Swiss-Austrian aerospace company, took to the skies on Wednesday morning, the company’s first day of trading on the Swiss SIX Exchange following its IPO.

DNB Boligkreditt and Sparebank 1 Boligkreditt (Spabol) issued deals flat to their curves with strong demand this week, while Bawag brought the first Austrian transaction through mid-swaps in almost three years.

Bawag became the first Austrian issuer to price a covered bond through mid-swaps since June 2018 on Tuesday when it issued a benchmark 10 year that attracted strong initial order momentum and an exceptionally granular order book. At the same time Austria’s Covered Bond Act consultation came to an end, suggesting the new legal framework will soon be enacted.

Erste Group Bank is lining up its first sustainability bond, as it looks to take advantage of a quiet period for new issuance and a recent back-up in rates.

Swiss-Austrian company Montana Aerospace has embarked on a virtual roadshow after launching an IPO on Friday. Sources close to the transaction are in high spirits after the first few days of education and hopeful for a strong result after nabbing two cornerstone orders.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, April 19. The source for secondary trading levels is ICE Data Services.

Rating: Aa1/AA+/AA+

Austria took centre stage in the euro sovereign bond market this week with the sale of its first ever four year benchmark alongside a new 50 year deal to complete its curve.