KfW

Despite the build-up of volatility in the market on Tuesday, KfW has been able to issue a three year benchmark, which will be priced this afternoon.

A deluge of sterling deals could burst through this week as issuers and investors’ pricing thoughts moved into alignment, dealers said after KfW sold a £400m tap with no new issue premium on Tuesday.

The future looks set to be one of smaller but more frequent deals for supranational borrowers if Tuesday’s prints from the Inter-American and Asian Development Banks are anything to go by. Both borrowers opened books on new global format benchmarks in the morning with pricing expected later in the day. Meanwhile, Bank Nederlandse Gemeenten tested the notoriously tricky 10 year maturity following KfW’s success with a similar deal last week.

The Inter-American Development Bank (IADB) and the Asian Development Bank (ADB) are set to answer the burning question in the SSA dollar market on Tuesday as they attempt to find the price at which the apparently rampant appetite for SSA dollar paper extends to tightly priced supranational credits.

A handful of borrowers have begun a raid on the dollar market all the way along the curve following the EIB’s triumphant reopening of the market on Tuesday. KfW looks to be powering its way through a 10 year global, KBN is preparing to price an oversubscribed five year deal and Municipality Finance is out with a two year FRN.

German agency, KfW on Tuesday followed Monday’s prelude from Bank Nederlandse Gemeenten with the first full orchestra euro benchmark of the year. The deal will be €5bn in size but will still be priced at the tight end of guidance.

KfW left a distinctly bullish hoofmark on the dollar market on Tuesday afternoon, mandating three banks for a 10 year global. It will be the first issuer to print in what is often a tricky tenor in dollars, and the deal comes as books on the first dollar benchmark of the year — a five year global for the European Investment Bank — swelled to over $7bn. Kommunalbanken has also mandated for a five year.

Buoyant conditions on the first proper day of trading after the Christmas break indicate that SSAs are in for a red hot start to issuance next week when as much as €25bn of benchmark issuance could hit screens. But ultra low yields could mean issuers have to cough up when it comes to new issue premia.

KfW paper will be in shorter supply next year, as the German government guaranteed agency is set to raise as much as €10bn less than its 2012 target.

Rentenbank was set to price on Tuesday afternoon what is likely to be its last dollar global before it receives an explicit government guarantee from Germany. The deal was a complete blow out and looks set to be priced on top of fellow German agency KfW’s secondary curve, according to the leads.

KfW took advantage of scant supply in the sterling market on Thursday to print an oversized £750m five year deal. But despite the respectable deal size, lead managers said it could have been even bigger and that could prompt a wave of issuance.

KfW priced €5bn seven year global at 5bp over mid-swaps on Wednesday afternoon, ahead of large fundraising efforts from the European Union and European Financial Stability Facility expected to begin next week.