RBC Capital Markets
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The European Investment Bank won a huge reception from investors for its debut €STR-linked floating rate note (FRN) this week, ignoring concerns about a lack of demand amid negative rates in the euro market. While there is a lack of clarity about calculating €STR bonds’ fair value and on Euribor’s future, public sector borrowers are expected to embrace the risk-free euro rate. -
Investors warmly welcomed the first benchmark €STR-linked floating rate note on Wednesday, brushing aside previous concerns about a lack of demand for euro FRNs as a result of deeply negative rates in the currency.
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Metro Bank came back to the sterling market on Wednesday to make a second effort at selling non-preferred senior debt, raising the pricing on its offer by 200bp to 9.5%. Market participants suggested the transaction was already a ‘done deal’, but warned that the interest costs would weigh very heavily on the bank’s profit and loss statement.
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NRW.Bank was well subscribed for its inaugural Sonia-linked floating rate note on Tuesday, with the books closing just one hour after opening.
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After mandating banks last week to explore a three year benchmark €STR-linked floating rate note, the European Investment Bank is moving forward with the deal, with initial price thoughts released ahead of an expected launch on Wednesday — the day the rate starts being published by the European Central Bank. However, some market participants have questioned the extent of investor demand for euro FRNs with negative rates commonplace in the currency.
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Suez Water Resources, the US subsidiary of Suez, the French water and waste management company, has issued $375m of US private placements, with the longest note expiring in 40 years — a rarity for dollar PPs.
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NRW.Bank has picked a syndicate of three banks to lead its inaugural Sonia-linked floating rate note, as it looks to become the second German agency to issue a public trade in the format.
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The risks associated with issuing at negative yields will drive non-European issuers away from the euro covered bond market, according to a report from NordLB.
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Royal Bank of Canada on Thursday became the first international bank to issue a five year Sonia linked covered bond, a trade that delivered competitive pricing and sizeable funding.
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The Province of British Columbia has weathered volatility from the fallout of last week's meeting of the US Federal Reserve to return to the dollar market for the first time in four years. Another rare SSA issuer, IDB Invest, also plans a return to the dollar market, with investor calls set up for this week ahead of its five year debut.
