Austrian Sovereign

Belgium took a flexible approach to funding this week, printing a pair of privately placed callable notes — a rare structure for a sovereign issuer.

Investor enthusiasm for SSA euro assets in today’s weaker market seemed to stumble at the Republic of Austria’s two tranche RAGB syndication launched this morning.

The Austrian Federal Financing Agency could achieve an attractive 1.75% coupon with a skinny spread to swaps if it opts for a 10 year syndication this month, said SSA bankers on Monday, as the country cancelled an auction.

SSA issuers are queuing up to print new business after a week that saw a rampant dollar market which included $10bn of new funding for the EIB and KfW and the first Spanish dollar trade in four years, and a euro market which gobbled up a new Belgian OLO and forgave Agence Française de Développement for attempting too tightly priced a deal a fortnight ago (see separate coverage).

The Republic of Austria’s funding needs for the year could be slightly lower than anticipated, SSA Markets understands, as 2012 government revenues may turn out to be higher than expected.

The Dutch State Treasury Agency (DSTA) is considering the possibility of issuing a dollar bond as part of a funding programme that has seen a slight reduction in size from 2012. The borrower is one of three north European sovereigns to announce their funding plans for 2013 this week.

The European Investment Bank and KfW added to the glut of dollar benchmark supply on Tuesday with new benchmark trades.

The European Investment Bank and Republic of Austria are considering dollars deals this week, SSA Markets understands. The deals will test demand for more expensive names in dollars, after blow-outs from a pair of European agencies and a Canadian province last week, as ultra low swap levels squeeze spreads over Treasuries.

The Republic of Austria has increased its commercial paper outstanding by 40% over the past month and lengthened its average tenors. That follows “enormous” demand for the country’s short term debt that has led to secondary market yields turning negative.

Standard & Poor’s placed 15 eurozone sovereigns on CreditWatch with negative implications on Monday. Six of those countries, including Austria, Germany and the Netherlands, are rated triple-A.