KfW

Guarantor: Federal Republic of Germany

A remarkable sterling deal from the European Investment Bank sparked off a week that could become a record opener for supranational and agency issuance in the currency.

Four sovereign, supranational and agency borrowers came to market for euros in the opening week of 2017, showcasing the market’s depth and flexibility. But the torrent of supply has meant that issuers haven’t had it all their own way.

Searing conditions in the sterling market could lead to a record opening week of SSA issuance in the currency as a pair of issuers lined up deals for Friday — despite this only being a four day week.

KfW and Ireland brought euro deals on Wednesday at the very top end of size expectations, alleviating a little of the pressure on what is set to be an extremely busy year in the currency. The trades came the same day as Municipality Finance mandated for a euro benchmark and a request for proposals came from the European Financial Stability Facility.

The European Investment Bank set a marker on Wednesday that sterling issuance could be just as hot this month as it was in January last year — as another pair of issuers hoped to add further evidence of that this week.

As a year where political upsets became the norm drew to a close, GlobalCapital picks the standout trades from a turbulent 2016.

KfW placed its final deal of the year on Tuesday, tapping a short dated sterling line and making this the busiest December for offshore SSA sterling issuance in over a decade.

Three public sector borrowers tapped the sterling market this week in a late spurt of issuance driven by the basis swap and a move in outright yields and, with 2017 brimming with political risks, borrowers might be advised to look for opportunities in the currency next year.

The public sector market is awaiting the final big event of 2016 in the shape of the US Federal Reserve’s rate decision later on Wednesday. But while a US rate rise looks all but a certainty, some funding officials are anxious about the potential for volatility in the dollar market next year from a different source — politics.

KfW tapped a December 2019 sterling line on Tuesday, printing £200m to round off the agency's strongest year in sterling since 2008.

On the day that KfW released its funding target for 2017, GlobalCapital caught up with Petra Wehlert, the agency’s head of capital markets, and Alexander Liebethal, head of new issues, capital markets, to find out more about its issuance strategy for next year.