BMO Capital Markets
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A strong start to the year for public sector dollar issuance is keeping up the pace so far this week, with last week’s slowdown during the Chinese New Year holidays only appearing to make investors hungrier. Both of Tuesday’s dollar deals were well oversubscribed — one spectacularly so — and there is a full card of issuers waiting to come on Wednesday. -
Analysts at the research house CreditSights expect that Canadian banks could soon start issuing more senior bonds for their total loss-absorbing capacity requirements (TLAC), having held back from the market after taking care of their funding needs with older forms of senior debt.
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Harley Davidson made heavy weather of strong US bond market conditions on Thursday after a dovish Fed and a month-long rally in spreads appeared to set the dollar market up for a strong run of issuance in February.
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Dollar SSA issuance picked up in earnest this week after a slower than usual start to the year, with a rich variety of borrowers printing deals, some in record size or with record books. Conditions are such that SSA bankers are confident supply will keep coming and demand stay high for the next few weeks — cheering news for one sovereign issuer looking to make a comeback in the currency.
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The Province of Ontario will this Friday be the fourth SSA from Canada to visit a very strong dollar market this week, after CPPIB Capital printed on Monday, Alberta on Tuesday and the sovereign made a rare visit on Thursday. Dexia Crédit Local also printed in the currency on Thursday and SSA bankers are confident of more supply next week.
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The super-hot dollar bond market is set to welcome a pair of SSAs on Thursday — including a rare name in the currency — after a mid-week lull in issuance.
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Public sector borrowers printed over $10bn of bonds on Tuesday in a dollar market that SSA bankers expect to keep its momentum in the weeks ahead.
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CPPIB Capital was comfortably oversubscribed for its $2bn trade on Monday with the dollar SSA market remaining attractive at the short end. Agence Francaise de Developpement, KfW and Kommuninvest will look to tap into lucrative conditions in the currency after mandating banks for deals on Tuesday.
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Public sector dollar issuance has had a slower start to the year than usual — in part because of super strong conditions in other currencies — but SSA bankers are confident the strength of the deals that did come this week will boost the pipeline.
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The European Investment Bank and Bank Nederlandse Gemeenten showed the strength of the dollar market on Tuesday as they sparked the sector into life for 2019 with benchmarks offering minimal concession. Another pair of SSAs are hoping to emulate that success on Wednesday.
