LBBW

Sub-benchmark deals are not so much of a novelty anymore: a trio of rare names filled their boots with diminutive deals this week, with each attracting bumper demand.

Rating: Aaa/AA/AAA

Two public sector borrowers hit the euro bond market on Wednesday, raising what might well be the final benchmark funding of 2020.

The European Union impressed once again as it sold the third bond under its Support to Mitigate Unemployment Risks in an Emergency (SURE) funding programme on Tuesday.

As benchmark issuance remains on the side-lines, smaller issuers have come out to play, with rare borrowers Cassa Centrale Raiffeisen dell’Alto Adige and Luminor Bank on the hunt for deals Lilliputian in size on Tuesday. A handful of larger issuers are keeping a close eye, and could come to the market with small deals of their own in the coming weeks.

The European Union’s third outing to fund its Support to Mitigate Unemployment Risks in an Emergency programme is set to hit the market on Tuesday in the shape of a 15 year tenor — matching the maturity of its loans.

The European Financial Stability Facility made a quick and impressive visit to the euro market on Monday, concluding its funding needs for the year, ahead of the European Union’s second outing under its Support to Mitigate Unemployment Risks in an Emergency (SURE) funding programme, which is expected to be priced on Tuesday.

A number of MTN investors are waiting for the result of the US election before committing themselves to the market, meaning next week is set to be a quiet one.

Three banks rode out a volatile bond market this week, printing senior deals amid positive sentiment caused by talks making it seem an agreement about a new US Covid-19 stimulus package was closer on Tuesday.

A pair of banks made opportunistic moves into a euro market buoyed by positive headlines around a potential US stimulus bill on Wednesday. France’s Crédit Mutuel Arkéa and Japan’s Sumitomo Mitsui Financial Group each tapped for senior paper, raising €500m a piece.

FIG borrowers may be well funded, but rates are low and market conditions are good enough to support opportunistic issuance — as was shown this week by a slate of deals across the capital structure. Given a volatile end to 2020 is likely, issuers will need to stay alert and take advantage of funding windows as they arise, write Frank Jackman and Bill Thornhill.

Nordic banks are likely to focus on smaller private placements for the rest of the year, with many already having enough liquidity that they do not need to print new benchmarks.