German Sovereign

Several German states are expected to make last-minute forays to the debt capital markets in December, following in the lead of Baden-Württemberg which tapped 10 year bonds on Thursday afternoon.

The end of November finds almost every sovereign in the scorecard more than 90% funded for the year. Italy's cause was helped in no small part by a bumper €22.3bn domestic inflation linked bond at the start of the month. The UK - with a funding year running from April March - is also well on track with 70% of its programme completed.

The State of North-Rhine Westphalia priced the first oversubscribed deal in euros in a week on Tuesday as initial price thoughts offered at a healthy spread to mid-swaps caught investors’ attention. The level of demand enabled the issuer to print a larger deal than targeted at the tight end of guidance.

Land NRW was the only issuer out with a benchmark mandate on Monday afternoon as SSA Markets went to press, but a few more issuers are waiting in the wings to pull the trigger before new issue markets begin to shut down ahead of year end.

State of Baden-Württemberg has around €300m of cash left to raise this year, after collecting €1bn from its first benchmark in nearly five years this week — a trade that reached full subscription but only after a slow book build.

The sovereign funding scorecard expands beyond Europe this month with the addition of Japan. The country has a whopping ¥156.8tr (€1.2tr) target this year but is well on track having raised ¥136.2tr so far.

The Joint-Laender provided the only benchmark euro activity on Wednesday, selling a €1bn 10 year. The deal fell short of full subscription owing to the tight pricing, though the leads said they considered it an acceptable outcome.

The Joint Laender (43) is expected to sell a new 10 year line on Wednesday, having hired five banks for the deal on Tuesday afternoon. The mandate comes in the wake of a long-dated bond from Austria’s OeBB-Infrastruktur that drew in buyers with the tantalising offer of a 3% coupon.

German states’ use of Australian dollar MTNs has reached an all-time high, but there are just two names are in the market — and few signs that other regions are willing to join.

The euros market for SSAs this week could have a distinctly sub-sovereign flavour. Région Rhône-Alpes has hired two banks to run its inaugural bond issue on EMTN documentation. The deal, a dual tranche effort, will be its first debt issue in over a year and only its third ever, SSA Markets understands.

Austria, Belgium, Finland and the UK were among the European sovereigns to add to their funding totals with benchmark deals this month.

State of North-Rhine Westphalia became the first German issuer to test the public markets after the weekend’s federal election in the country on Monday.