RBC Capital Markets

A dollar market that has been a haven for issuers avoiding the troubled euro sector is starting to show signs of congestion, bankers have warned.

NordLB reopened a four year public sector backed Pfandbrief on Wednesday in a move which locked in exceptionally cheap funding. But because the deal was largely placed with captive German savings banks, it offered little clue about the state of demand for euro covered bond benchmarks.

The dollar market hosted benchmark covered bond issuance this week as Australia and New Zealand Bank and DNB Boligkreditt issued deals under 144A documentation, in the same size and tenor and at the same spread.

While turbulence struck the euro market this week, issuers in sterling had an easier time of it with three companies putting together solid deals in the currency.

Eurofima is set to become the latest issuer to sell in dollars this week, with what will be its first deal in the currency since a $1bn three year in May 2010.

Public sector issuers underlined the strength of demand in the dollar market this week as issuers were able to get benchmarks away despite volatility in US Treasuries.

BMW issued its first public sterling bond of the year on Tuesday, achieving an attractive arbitrage against euros for a long five year maturity, according to bankers away from the deal.

The public sector dollar bond pipeline for Wednesday is filling up, with a series of issuers set to follow a three year dollar benchmark from the European Investment Bank on Tuesday.

L-Bank mandated banks on Thursday for its inaugural Kauri bond, while Export Development Canada opened a tap of a 2019 Kangaroo.

KfW drew strong central bank interest for a sterling tap on Tuesday, becoming the first SSA to print in the currency since last week’s UK general election.

Swedbank returned to covered bonds on Wednesday for its third funding exercise of the year, deciding to launch in Reg S format for its first dollar benchmark of the year instead of using its 144A programme. The decision came as the euro rates markets suffered a further bout of intraday volatility following last week’s instability.

Dufry – HES Beheer – BCA Marketplace – Club Med – Grupa Azoty – International Bank of Azerbaijan – Kungsleden – UBM Group – Oriflame