Currencies

Is this bond expensive or are BTPs cheap? That was the question investors considering Wednesday’s debut corporate bond issue from Italian supermarket chain Esselunga had to answer. But there was more to come as an Italian high yield borrower also raised funds at sub-2% writes Nigel Owen.

Norwegian state-owned grid operator Statnett priced its debut benchmark euro corporate bond on Wednesday, opting to go longer than the 10 year tenor many of the recent utility issuers chose.

PKO Bank Polski issued in Swiss francs for the first time in five years this week amid an improving basis swap out of the currency that is opening up a window for deals.

KfW tapped its July 2020 Australian dollar green bond for A$200m ($156.9m) on Wednesday, pricing well inside its existing Kangaroo curve — an illustration of the developing maturity of green markets down under.

The Federal State of North Rhine-Westphalia came to market for its longest ever bond on Thursday, raising €1bn with a 40 year transaction in a market that “just can’t get any hotter”, according to a banker at one of the leads.

This week, Esselunga, a 60 year old Italian supermarket chain issued its debut corporate bonds. It is rated Baa2/BBB-, the same as its own government.

All four of the investment grade corporate bond deals to price so far this week were preceded by investor roadshows. This leaves Verizon as the only publicly acknowledged deal yet to launch, but next week’s European Central Bank meeting may persuade some issuers to bring deals unannounced.

Deutsche Bahn returned to the market after a two year absence with the longest dated Swiss franc bond from a German corporate. Swap costs have made it tricky for Deutsche Bahn to borrow in the Swiss currency. But the lead managers found a window at 13 years for the issuer to exploit.

The Joint Laender printed €1bn of 10 year paper on Tuesday, filling the book unusually quickly for a Laender deal. The deal was joined in the market by a European Union (EU) tap of an April 2031 line.

On Wednesday, Italian supermarket chain, Esselunga, became the first non-utility issuer to sell a benchmark corporate bond since Iliad’s €650m deal on October 5. The company’s debut deal saw one tranche priced at a lower yield than Italian government bonds.

Norwegian state owned grid operator, Statnett, priced its debut benchmark euro corporate bond on Wednesday, continuing the recent supply of utility issuers selling longer dated new issues.

The public sector debt market is providing high volumes of funding at astonishingly tight spreads as investors brush off political concerns and scramble to pick up what supply remains for 2017. However, central banks around the world are weighing on investors’ minds.