IFC

A quartet of SSAs borrowed a combined A$940m ($613.4m) into the Kangaroo market this week, spurring the SSA Aussie dollar market on to its best monthly volume in over nine months.

Social bonds are proving to be a key part of SSAs fight against the coronavirus, with $10.6bn equivalent printed since the start of the pandemic. Having already tapped core currency markets last month, this week a pair of supranationals turned towards niche currencies to fund their response to the pandemic. With demand for the social format high, both bankers and funding officials are hopeful the new investor interest will stick around after the pandemic passes.

The World Bank has increased its funding allowance for its 2019-20 fiscal year by $5bn. It now plans to raise between $55bn and $65bn, up from its previous $55bn-$60bn target, according to a funding official at the supranational.

Despite the terrible effects of the coronavirus pandemic on capital markets, the MTN market is open and functioning.

This week’s funding scorecard looks at the progress supranationals have made in their funding programmes during a first quarter wracked by volatility.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, March 16. The source for secondary trading levels is ICE Data Services.

A vicious move in swap spreads left investors in IFC’s $1bn social bond with one of the lowest SSA spreads to US Treasuries ever on Wednesday, and a subsequent reversal has left investors wincing. Some questioned the strategy and timing of the trade, but most simply thought that investors were the victim of circumstance.

This week, it was the best of times, it was the worst of times – and despite volatility caused by the spread of the Covid-19, a trickle of MTN issuance has managed to slip through into the market.

Rating: Aaa/AAA

The public sector bond market pipeline is likely to remain sparsely populated as coronavirus pandemic volatility engulfs markets. But SSAs are happy to sit on the sidelines and wait for better market conditions.

International Finance Corporation defied volatility to achieve an impressive result in the dollar public sector bond market on Wednesday as it managed to bring in the spread by 4bp to price through the European Investment Bank.

A window for Kangaroo issuance opened this week, as a positive move in the Australian dollar/euro basis swap helped rouse a slumbering market that had not seen a deal for a fortnight. In spite of unstable conditions, SSAs entered the market on Monday and Tuesday, with a trio of regular borrowers tapping six lines for a combined A$575m ($364m).