Currencies

Bank Nederlandse Gemeenten fell victim to a volatile Bund curve and crowded pipeline, falling short of its hopes with its first deal of the year.

It has been an active week for Australian dollars, with the Asian Development Bank and the Inter-American Development Bank both selling in the middle of the curve.

Corporate bond market participants show little sign of caring about the end of European quantitative easing and the danger that presents to their market — which has arguably been the sector most affected by the policy. Nigel Owen reports.

Given the success of the corporate bond market's opening deals of the year, it was perhaps surprising that only one issuer came to market on Thursday, but Daimler achieved similar success to the RCI Banque Wednesday deal that it copied.

Ireland opened 2018 with a €4bn print deemed “spectacular” by a banker away from the deal, who said that it was priced flat to the sovereign’s curve.

Investment grade corporate bond market players only had to wait one day for the first new deals of 2018. Renault and BMW both brought new paper to market on Wednesday, selling a total of €2.75bn of bonds with little premium.

The SSA market is off to a typically fast start, with four deals in the market and more expected. However, a newly aggressive tone from members of the European Central Bank governing council could rock the boat.

The lack of volatility combined with the continual grind tighter of spreads of investment grade corporate bonds meant investors in the asset class enjoyed good returns in 2017. Similar conditions look set to prevail at the start of 2018, but investors need to maintain vigilance.

Zürcher Kantonalbank (ZKB), in accordance with recent tradition, was the first canton off the blocks, opening the Swiss market with a Sfr240m ($246m) 10 year bond on Wednesday. Basellandschaftliche Kantonalbank (BLKB) was quick to follow, printing a Sfr300m nine year bond an hour later. A lack of issuance at the tail end of 2017 has buoyed the market, leaving participants hopeful of additional cash to put to work in the new year.

Ireland is set to become the first SSA borrower of 2018 to print a syndicated bond, picking banks for a benchmark deal to be sold on Wednesday. The German state of Lower Saxony will also come to market on Wednesday.

Three issuers have been active in the Australian dollar market so far this week, including two borrowers targeting deals in socially responsible formats.

Syndicate managers in the corporate bond market are back at their desks and ready to get the year off to a fast start, with few thinking the start to 2018 will be any different to January of last year.