Euro
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Ireland is looking at the possibility of issuing its first ever benchmark inflation linked bond in 2019, amid an expected surge in the euro public sector linker market this year. Meanwhile, Portugal is waiting for the final approval of its inaugural Panda bond, which will be sold as part of an Rmb6bn three year programme. -
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Rating: Baa1/BBB+/BBB+
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After waiting nearly a month, US engineering firm Emerson Electric on Tuesday landed the dual tranche deal it roadshowed in December. The €1bn dual tranche offering was a good deal in its own right, but could also herald the return of the Reverse Yankee market in 2019.
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French toll road operator APRR started its funding plans earlier than previous years when it sold a €500m nine year deal on Thursday. Its November deal was its only transaction in 2018, but even in busier years it has waited until May before getting started.
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On Wednesday, Deutsche Bahn sold its first bond of 2019, setting the bar with a €1bn 10 year deal that has a new issue premium of less than the 20bp limit that triple-B rated names had failed to tighten past.
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The public sector euro market’s thundering start to the year stayed noisy on Thursday as a quartet of smaller issuers from across the continent printed oversubscribed deals.
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Emerging markets got off to a cracking start for the year this week with a slew of sovereign deals hitting screens. High quality, low beta sovereigns Israel and Slovenia began proceedings with impressive euro deals.
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Telecom Italia attracted €4.5bn of orders on Tuesday, which was no mean feat, having to contend with a €4bn four-tranche Orange deal in the market on the same day, but also the uncertainty surrounding the Italian government and its budget hanging over the country’s economy. This, combined with the company’s Ba1/BB+/BBB- ratings, meant it had to offer what research house CreditSights saw as a 90bp premium to its secondary curve for the new 5.25 year deal.
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With €24bn of orders placed for just over €11bn of new corporate bonds this week, the investment grade corporate bond market has reopened for the year with a full-throated roar. The size of demand will give encouragement to other borrowers but they will have noted the higher spreads and new issue premiums required to raise bond funding compared to last year, writes Nigel Owen
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Israel rounded out an immensely successful opening week of 2019 for emerging market sovereign bond issues with its largest deal ever. The borrower raised €2.5bn of 10 and 30 year debt, pushing out its curve and printing at its tightest ever spread for a euro deal.
