Euro

A pair of sovereign borrowers hit the crowded euro bond market on Wednesday, pulling down a combined €7bn. Public sector issuance is showing no signs of slowing: Wednesday’s borrowers received huge orders.

At this year’s Central & Eastern European Forum, Société Générale hosted the workshop titled ‘CEE central banks’ balance sheet expansion: a necessity or a risk?’. The speakers were Radoslaw Cholewinski (deputy head of fixed income at Pekao TFI), Martin Dolejs (portfolio manager, pension fund and insurance portfolios at Allianz), and Zoltan Aroksallasi (FX and rate strategist at Erste Bank), and I thank them for their insight, their knowledge, and their time. By Marek Drimal, EMEA Strategist, moderator of the workshop.

The Republic of Slovenia is set to sell its longest bond ever on Tuesday, picking banks for a 60 year euro benchmark — a 36 year extension of its curve.

The European Central Bank meeting on January 21 did not strike a pleasing note for investors in eurozone government bonds, and spreads are still wider. But primary market participants seem unconcerned.

Deutsche Pfandbriefbank launched its first green bond this week, attracting twice as much demand as it needed for its €500m senior print.

European Central Bank president Christine Lagarde refused to be drawn into naming a specific spread target that the central bank will defend in a press conference on Thursday but investors may find out for themselves in the wake of the meeting. BTPs sold off sharply after Lagarde spoke, perhaps indicating that the central bank has not done enough to convince investors of its support.

The State of North Rhine-Westphalia found plenty of demand as it came to the market with a new 30 year benchmark on Thursday, ahead of the European Central Bank’s first monetary policy meeting of the year.

Investors have enthusiastically backed a €4.6bn financing package for Ineos Quattro, funding the integration of BP’s aromatics and acetyls business into the chemicals conglomerate. Strong demand allowed the company to raise more secured debt than expected, cutting funding costs, and strip out a bank-targeted term loan ‘A’ in favour of a bigger, cheaper, institutional term loan ‘B’.

The State of Brandenburg failed to reach full subscription for a new 25 year trade on Wednesday as it priced at an exceptionally tight level to its secondary curve.

Italian prime minister Giuseppe Conte won a vote of confidence in the country's senate last night, removing the immediate threat of the government he leads collapsing. Relieved investors flocked back to Italian assets in the aftermath but Italy’s political troubles are unlikely to be over.

Deutsche Pfandbriefbank could take advantage of a quiet backdrop in the euro FIG market to launch the first deal from its green bond framework.

France set a new order book record with its new 50 year syndicated bond on Tuesday. Two other public sector borrowers joined the sovereign at the long of the euro curve.