IFC

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).

Indonesia's OCBC NISP raised Rph2.75tr ($191m) from International Finance Corp through privately-placed sustainable bond transactions, split between a gender bond and a green bond.

South Africa’s Standard Bank has issued a $200m green bond, which was bought by the International Finance Corporation (IFC) in its entirety. The deal is the largest green bond ever issued by an African borrower.

MTN deal volumes year-to-date have slumped by nearly a third year on year, falling from $51.6bn in 2019 to $35bn this year. The fall has been particularly pronounced in core currency deals, with deals from other currencies forming a larger proportion of the market.

Two sterling public sector bond issues were announced on Tuesday, but aside from timing, the trades had little in common. The UK Debt Management Office printed £2.5bn at 50 years, while the International Finance Corp raised £350m with a seven year.

The International Finance Corp is set to become the latest public sector borrower to head to the seven year part of the sterling bond curve, in an attempt to achieve a more attractive funding cost when swapping out of the currency.

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

SSAs have had their best year in non-core issuance since 2012. SSA issuance (excluding euros, dollars and sterling) is up $3.83bn year on year to $82.95bn year to date. Much of this borrowing — some $32.8bn, according to Dealogic — has come through the MTN market.

This week's funding scorecard looks at the progress supranationals have made in their funding programmes at the beginning of December, with some issuers also setting their funding targets for 2020.

The International Finance Corporation returned to the Czech koruna bond market after a 21 year absence this week to place the largest SSA deal in the currency since 2015.