German Sovereign

A pair of European agencies tapped euro lines today in a recovering but still cautious SSA market.

After reopening the post-Brexit dollar market with a $150m tap on June 23, Rentenbank is coming back for more, opening books for another tap to be priced on Tuesday.

A pair of public sector borrowers on Monday joined the handful of issuers that have sold well subscribed taps since the UK voted on June 23 to leave the European Union. But there are growing hopes that the first new issue since Brexit could happen this week — in euros, at least.

KfW found enough demand to print a A$400m ($299.2m) tap of its January 2019 Kangaroo bond late last week, highlighting a remarkable return to stability for markets after the previous week's Brexit vote.

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The SSA market got back to business swiftly, if somewhat cautiously, this week, with taps and private placements (PPs) across core currencies coming quickly after the UK’s vote to leave the European Union. Although none of the trades were especially ambitious, their success has set a positive tone for the weeks to come.

Rentenbank sold a public trade in dollars on Thursday, the first such deal since the UK voted on June 23 to leave the European Union.

The UK may have voted to leave the European Union but German’s biggest agency showed it still plans to visit the UK’s currency, as it sold the first sterling deal from an SSA since the UK’s referendum late last week.

The first of three political risks to the stability of the capital markets faced passed without causing disruption this week, as a mechanism attributed with calming fears amid the eurozone sovereign debt crisis was declared legal.

A vote for the UK to exit the European Union next week is likely to intensely magnify a strong rush into safe haven assets, but some bankers are still confident that after the initial furore of a ‘Brexit’ there could be room for issuers eyeing euro deals in July to go ahead. And, if the UK opts to stay in the EU, issuers are likely to be lining up to print in July.

The 10 year Bund yield came within a whisker of negative territory this week. While that may be seen as the complete breakdown of everything you ever thought you knew about bonds, for one closely related branch of issuers it represents a golden age.

Guarantor: Financial Market Stabilisation Fund of the Federal Republic of Germany