Inter-American Development Bank IADB

The public sector debt market has had a superb start to 2020, breaking records right and left in defiance of geopolitical tensions that, in previous years, would have scuppered the market as it left the dock, writes Lewis McLellan.

The European Investment Bank and the Inter-American Development Bank amassed strong demand from investors to kick off their funding programmes for the year on Friday, with the former receiving the biggest ever order book in the sterling supranational and agency bond market, according to the leads.

For public sector issuers, niche currency deals have offered attractive opportunities for arbitrage funding, with spreads into euros and dollars spurring on demand this year. Meanwhile, strong investor appetite for green paper has seen niche shoots blossom throughout 2019. Frank Jackman reports

This week's funding scorecard looks at the progress supranationals have made in their funding programmes at the middle of October.

The sterling SSA green bond market is going from strength to strength, buoyed by new legislation requiring pension funds to disclose their environmental, social and governance strategies.

The Inter-American Development Bank and the State of North Rhine-Westphalia only managed to raise small sizes in the sterling market on Tuesday, with the leads on the latter declining to comment on whether the deal was fully subscribed.

The torrent of ESG supply shows no sign of slowing. Inter-American Development Bank’s debut sustainable development bond is set to come to market on Tuesday in sterling, alongside a sustainability bond from Bank Nederlandse Gemeenten.

Rating: Aaa/AAA

There were no problems with competing supply as a trio of public sector borrowers enjoyed strong demand for dollar bonds this week, despite all three having the same maturity.

KfW won huge praise from on-looking bankers for a curve extending and rare 10 year dollar green bond on Tuesday. The Inter-American Development Bank (IADB) and Österreichische Kontrollbank (OeKB) also enjoyed success in the dollar primary market with three year trades, with the former selling its debut Sofr-linked floating rate note.

KfW mandated banks for its longest ever dollar green bond on Monday, while the Inter-American Development Bank is taking indications of interest for its inaugural Sofr-linked floating rate note.

A trio of European agencies and a supranational all priced taps at the long end of the Kangaroo curve last week, with tenures ranging from nine to 12 years. Yields on these notes have fallen compared to previous taps, as the Kangaroo market feels the effects of the global bond rally.