BMO Capital Markets
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After a year during which euro issuance from SSAs has far outstripped that in dollars, thanks to the vagaries of the euro/dollar basis swap, a German agency was able to nip in to a funding week shortened by US elections and central bank meetings to score a strong result with its sole dollar benchmark of the year. -
Rentenbank and Eurofima showed that Tuesday’s midterm elections in the US might be hogging most television airwaves but they have been making little waves in the dollar SSA market.
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A pair of public sector borrowers are looking to eke out the last bit of cash from the dollar market before it shuts down for the US mid-term elections on Tuesday night.
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Investors were in defensive mode in the dollar market this week as they snapped up short dated trades and floating rate notes, with demand particularly heavy from central banks and official institutions. Bankers are hopeful that benchmark supply will return next week.
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The European Stability Mechanism priced its second ever dollar benchmark at a “fair” level of around 5bp over European Investment Bank’s September 2020, according to onlooking SSA bankers. Elsewhere in the dollar SSA market, Inter-American Development and NRW.Bank mandated banks for floating rate notes.
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A global equity sell-off mid-week caused some jitters among bankers covering a live Kommunalbanken dollar deal on Wednesday, but the nervousness proved unfounded as the trade came through to acclaim. The deal was typical in a week where SSAs priced tight and with big books despite choppy wider markets.
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Kommunalbanken showed “the resilience of the dollar SSA market” as it printed a $1.5bn October 2021 Reg S/144A benchmark around its secondary level amid global market volatility on Thursday, said SSA bankers away from the deal.
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SSAs are enjoying strong conditions in dollars, with KfW and the Province of Ontario finding plentiful demand on Wednesday despite bringing deals that on-looking bankers said were “pretty much” in line with secondaries. Kommunalbanken will price a dollar benchmark on Thursday that leads said was following a similar pattern.
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Comcast got October off to a flyer after high-grade corporate dollar issuance slumped to its weakest level for four years in third quarter. However, aside from Comcast there were slim pickings in the high-grade market this week.
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Canada should have thought twice before stripping banks of their ability to use senior debt as an ordinary funding tool.
