Norway

A flattening and rising US Treasury yield curve may be sparking concerns of a slowdown for the US economy but it is having the opposite effect on the short end of the dollar market for public sector borrowers, writes Craig McGlashan.

Kommunalbanken could potentially visit the green bond market before the summer, helping to fund a growing green lending programme. It is also likely to follow up with another conventional benchmark issue after the break.

Kommunalbanken priced a three year dollar benchmark flat to its secondary market curve on Wednesday, picking up $1bn at a punchy spread.

Kommunalbanken has circulated initial price thoughts of 5bp area over mid-swaps for a no-grow $1bn three year benchmark, a level that bankers away from the trade said was 'well priced'.

Sparebanken Sør was able to get a ‘good and tight’ print on its first outing in the euro market for senior unsecured debt on Monday.

The Kingdom of Norway’s debut bond syndication, priced on Thursday last week, does not herald the Scandinavian country’s turn to the green bond market, despite widespread hopes on the socially responsible investment (SRI) scene that the country could expand the tiny pool of sovereign green issuers.

The Kingdom of Norway sold its first syndication on Thursday, following a two week global roadshow intended to broaden and internationalise the investor base buying government debt from the Scandinavian country.

Rating: Aaa/AAA

Investors have begun to push back against ever tighter levels in the public sector dollar market, with a deeply sub-Libor trade this week failing to find full subscription. But there was not much concern ahead of next week’s Easter holidays, with some strong funding already raised in the first quarter and the new Federal Reserve chair’s first Federal Open Market Committee meeting passing this week without any great surprises.

A sharp move wider in short end swap spreads has allowed public sector borrowers to offer substantial pick-ups to US Treasuries at deeply sub-Libor levels, but investors are beginning to rebel.

The Nordic Investment Bank has announced that it will become the second borrower of the week to access the two year dollar market. The first, Kommunalbanken, scooped up $1.25bn on Tuesday.

Kommunalbanken announced a two year dollar benchmark on Monday, coming on the heels of a strong week for dollar issuance.