Deutsche Bank

Quasi-sovereign Indian Railway Finance Corp generated more than $3bn in demand for its $500m five year bond this week, as investors jumped at the chance to diversify away from China and Korean credits — and also took a bet that the bond would be included in the EMBI.

A five year facility that will be used to finance oil purchases by BP from Rosneft will likely not reach its initial expected amount of up to $5bn.

Corporate bond issuance is set to get busier again in Europe next week, bankers say, with a drive-by deal also possible on Friday.

Covered bond spreads are so tight that there is almost no scope for secondary performance, bankers have warned. “Core markets are in a zone of low oxygen,” one said on Tuesday, as KBC Bank priced a deal within a few basis points of Landesbank Hessen-Thüringen and Deutsche Kreditbank.

ThyssenKrupp sold a €1.25bn 5.7 year bond on Wednesday. The investment grade-style deal had a 15bp-20bp new issue premium and performed in the aftermarket, suggesting strong demand for crossover credit.

Sberbank printed $1bn of subordinated debt on Tuesday at a price that three syndicate managers away from the deal said was very aggressive. After being priced at par, the note was trading at 99.75-100 on Wednesday morning, initially indicating that the leads were right to push it, but it had sunk as low as 98.875 on Thursday afternoon, fuelling thoughts that pricing was too tight for the deal size.

The covered bond primary market lived up to supply expectations this week with five issuers tapping the market in the first two days of the week. BNP Paribas stood out, showing the strength of its brand, and the market, by pricing the tightest French covered bond deal of the year.

Demand for dollar deals from a pair of German issuers surpassed expectations this week, as Erste Abwicklungsanstalt followed a heavily oversubscribed print from KfW with its debut benchmark in the currency — and had to increase the size in the face of strong demand.

Guarantor: Federal Republic of Germany

More SSA issuers could look to the Kauri market after a World Bank deal this week drew strong demand from international investors and more than doubled in size.

Corporación Andina de Fomento (CAF) hopes to increase its presence in the Hong Kong dollar and Norwegian krone markets, a funding official at the development bank told EuroWeek. But the borrower may struggle to find demand for these currencies, according to dealers.

Issuance of European subordinated FIG debt hit its highest year-to-date level since 2007 this week, as tier two debt wrested the limelight back from senior unsecured with a small but solid deal from Swedbank and a €5bn book for ING.