Euro

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.

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.

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.

Germany has announced its funding target for 2018, reducing its long term fixed-income target by €5bn from its 2017 number but aiming for a total, including short term instruments, of €183bn — up from €172bn in 2017.

Public sector debt bankers and fellow debt management office heads have lined up to praise the impact on the Italian and wider European sovereign debt markets of Italy funding head Maria Cannata, who is retiring after nearly three decades at the country’s Treasury. While universally agreeing that she would be greatly missed both professionally and personally — including her sense of humour — there was also strong confidence that the team she has put in place will be able to meet all Italy’s future challenges.

Vonovia, the German housing company, is likely to issue debt next year, to finance its €5.2bn cash offer for Austrian peer Buwog, announced on Monday morning.

Ratings agency Moody’s has said that it expects a high level of refinancing of hybrids by utilities in 2018, following €4.2bn of hybrids issued by the sector in 2017.

Maria Cannata of the Italian Tesoro, one of the sovereign bond market’s best known and longest serving funding heads, is to retire, just after the new year.

European Central Bank president Mario Draghi struck an upbeat note on the currency bloc’s growth prospects at a press conference following a governing council meeting on Thursday, but analysts still expect borrowers to enjoy supportive conditions for some time yet. The meeting — and the approaching year end — meant euro supply was thin on the ground, but Iceland did take the opportunity to return after several years away.

Rating: A3/A/A

Ireland is open to the possibility of adding green bonds to its funding mix as it looks to diversify its portfolio of debt instruments, according to the country’s head of funding.