German Sovereign
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L-Bank on Tuesday became the first SSA issuer to sell a Sofr-linked floating rate note with Reg S only documentation. The $500m no-grow deal had over $600m of orders, with $125m of those coming from the leads — which said any stock they were left with would be useful for providing paper to investors looking to test their Sofr systems in the coming weeks and months. -
The European Investment Bank and FMS Wertmanagement sold well oversubscribed issues in the sterling SSA market on Tuesday before an expected quieter period for new issues in the currency next week as parliament votes on prime minister Theresa May’s revised Brexit deal.
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L-Bank is set to bring the first ever Reg S only Sofr-linked bond on Tuesday. The German agency will be joined in the dollar SSA market by Japan Finance Organization for Municipalities, which has picked banks for its first benchmark of the calendar year.
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Dollar swap spreads tightened dramatically in the middle of the week — with bankers at a loss to explain why — but the SSA sector was still “rock solid” in one syndicate head’s words, so the currency should be open for business next week. The only two dollar trades this week — a bond market return from CDP Financial and first deal of the year from Erste Abwicklungsanstalt — both went well.
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Erste Abwicklungsanstalt (EAA)’s decision to forego the price discovery process on its first benchmark of 2019 paid off, as the issuer printed more than its original target for the dollar deal on Tuesday at a level that some SSA bankers away from the deal said may have been slightly through its secondary curve.
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Sterling issuance may be slowing down after its record start to the year, but investor demand shows no signs of cooling — as KfW proved with a tap on Monday that was nearly double its original target size. Any “bank treasury friendly” borrowers should find healthy demand if they follow in the currency, said bankers.
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Erste Abwicklungsanstalt (EAA) looks set to have the dollar market to itself on Tuesday with its first benchmark of the year, and is foregoing the price discovery process.
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New issue premiums almost seem to be a thing of the past in this week’s dollar market. As one head of SSA DCM put it: “the secondary market is just too cheap for primary”.
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L-Bank will go on the road to promote the first ever Reg S dollar benchmark priced over the dollar risk free rate, Sofr.
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L-Bank will go on the road to promote the first ever Reg S dollar benchmark priced over the dollar risk free rate Sofr.
