Euro

A seismic shift has affected appetite in euro borrowing. Investors driven out to outlandish maturities by low rates have come flooding back to the belly of the curve.

Auckland Council on Thursday pulled off a 7bp tightening for its first ever public deal in euros. The trade was joined in the market by paper from the City of Hamburg and Bpifrance Financement.

Agence Française de Développement made its 2017 debut with a €1.5bn five year on Wednesday, but longer dated euro deals seem to be struggling as European Investment Bank found with a April 2032 tap.

Portugal took out around a fifth of its funding programme for 2017 on Wednesday, printing a €3bn 10 year deal. Bankers away from the trade said pricing looked a little cheap — but at the same time defended the sovereign’s debt office for playing it safe to win size.

KommuneKredit is planning to sell its first green bond, aiming to bring the deal to market in the second quarter of 2017.

The January rush of bond issuance is flooding screens with public sector deals, with $10bn of dollar funding and €4bn in euros arriving on Tuesday alone. Issuers are looking to stock up ahead of what may be a volatile year, but the strain may be beginning to show.

Indian power company NTPC and Malaysia’s Genting Overseas Holding Company are planning their respective debut outings, with the former seeking euros and the latter dollars.

The belly of the curve appears to be the favoured spot in euros, with the European Financial Stability Facility selling a €3bn November 2022 and Agence Française de Développement announcing that it intends to bring an April 2022 on Wednesday. Further out in the curve, the market is proving less supportive.

Portugal will kick off its funding year with a 10 year euro benchmark, mandating for the deal on Tuesday shortly after announcing its bond issuance target for 2017.

KommuneKredit and Unédic have both pulled off strong trades, getting in ahead of what is expected to be a busy week in euros by coming to market on Monday.

Ireland’s funding office will unveil its first quarter auction schedule this coming Monday, having already taken a sizeable chunk out of its 2017 funding needs with a syndication earlier this week.

KommuneKredit will be first out the blocks in a major currency for the second week running this coming Monday, after mandating banks for a new benchmark on Friday.