Currencies

Australia and New Zealand broke bond syndication records yet again this week, as Australia printed its largest ever deal while New Zealand scooped its largest ever order book with a seven year tap.

US insurance company Athene Holding this week sold its second funding agreement-backed security (Fabs) in euros, just a couple of months after making its debut in the currency.

Finland was on track to receive its biggest ever book for a syndication as it came to the market with its third euro benchmark of the year on Wednesday.

Huangshan Tourism Group Co opted for euros for its maiden offshore bond. The €230m transaction benefited from a standby letter of credit from Bank of China’s Anhui branch, as well as strong bookrunner support.

The State of North Rhine-Westphalia and Nederlandse Waterschapsbank will be the first two public sector borrowers to test investors’ appetite for euro deals in the long end of the curve following the summer break.

The State of Baden-Wuerttemberg only managed to sell around half of its €1bn 10 year bond to investors on Tuesday as it came flat or slightly through its curve alongside competing supply in the tenor.

Bank credit investors are showing they won’t be forced into buying every new euro deal after the summer break, as they appear content to wait for further supply.

The European Investment Bank re-opened the primary euro public sector bond market with a decent outing in the 10 year part of the curve on Tuesday. Finland is next up, hitting screens for a deal of the same tenor expected on Wednesday.

The bank bond market burst back into life on Monday, with BNP Paribas and Commerzbank shedding light on favourable pricing conditions in euros following the summer break.

New Zealand began marketing a tap of its outstanding April 2027 bond on Monday as sovereigns get moving for a busy period of syndications. Finland could follow up with the first post-summer pubic sovereign bond in a core currency later this week.

Analysts at Société Générale say that bank credit spreads have plenty of room left to tighten in 2020, especially as supply volumes fall in the second half of the year.

The euro/dollar cross-currency basis swap has moved back in favour of euro issuance for the first time in three months, but with a wall of euro supply looming, the favourable level may not be enough to entice issuers away from the dollar market.