Goldman Sachs

The public sector euro market’s thundering start to the year stayed noisy on Thursday as a quartet of smaller issuers from across the continent printed oversubscribed deals.

Israel rounded out an immensely successful opening week of 2019 for emerging market sovereign bond issues with its largest deal ever. The borrower raised €2.5bn of 10 and 30 year debt, pushing out its curve and printing at its tightest ever spread for a euro deal.

Appetite for eurozone sovereigns is showing no signs of slowing down after Ireland and Portugal joined Belgium this week in scoring their largest ever syndication order books. Several other borrowers sold euro trades on Wednesday, with more supply expected this week as the pipeline has “accelerated” ahead of next week’s parliamentary vote on the UK’s Brexit deal.

Israel hit the market on Wednesday with a dual tranche euro deal, looking to test demand at the long end of the yield curve. The country’s reputation as a quality issuer appears to have carried it through.

The European Investment Bank and Bank Nederlandse Gemeenten showed the strength of the dollar market on Tuesday as they sparked the sector into life for 2019 with benchmarks offering minimal concession. Another pair of SSAs are hoping to emulate that success on Wednesday.

The dollar market for public sector borrowers begins in earnest on Wednesday with a pair of borrowers out with benchmarks and bankers confident the deals will go well thanks to a demand/supply imbalance. The trades follow a small floater tap from a supranational on Monday that was the first syndicated deal of the year in the currency.

Eli Lilly, the US pharmaceuticals company, has agreed to buy Loxo Oncology for around $8bn, as big ticket consolidation in the drug sector continues apace.

Guangzhou R&F Properties Co started the new year by tackling its upcoming bond maturity head on, selling a $500m note on Thursday to refinance a February deal.

Emerging market issuers are hesitant to rush back into the market in the new year. Most are waiting on the sidelines until the tone becomes more settled and investor desks are fully staffed.

Berkshire Hathaway was one of five issuers to brave choppy conditions on Thursday and open the dollar market with the first trades of 2019.

Israel has opened the CEEMEA primary bond market for the year, mandating three banks for a euro denominated 10 year and/or long dated benchmark Reg S note.

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