Populism and economic change are melting down old idols. When the next crisis comes, new fiscal and monetary tools will be used — including helicopter money.

The state of Israel returned to the yen market for the first time in 18 years this week to raise ¥15bn ($140m) of seven year debt. The private placement marks the state’s third visit to the capital markets in 2019 and its first non-euro trade of the year.

Supranational issuers have had a wide variety of options for funding this year. A strong dollar market has offered plenty of chances to fund in size, while some dollar funders have returned to euros thanks to a favourable basis swap. Bank treasuries shoring up on Sonia assets have helped push sterling issuance to record levels, while markets as diverse as the Norwegian krone and Turkish lira have also found homes for supranational paper. The Sofr market in dollars has also started to develop, although unlike its sterling risk-free rate cousin Sonia, standards on rate calculation are yet to be agreed. GlobalCapital brought together funding officials at some of the world’s highest rated borrowers to discuss these topics and more.

Public sector borrowers are driving the implementation of the new risk-free rates in sterling and dollars, with the former now a widely accepted and mainstream product in fixed income. A group of supranationals and agencies are also working closely with the European Central Bank to revolutionise the issuance and distribution of euro-denominated bonds. Burhan Khadbai reports.

European agencies trod carefully at the start of 2019 amid unsettled bond markets as the European Central Bank pulled the plug on its quantitative easing programme. But as the year has progressed, spreads and yields have rallied strongly as it becomes increasingly likely that the ECB will inject further monetary stimulus to aid lacklustre growth in the eurozone. Meanwhile, funding conditions in dollars pose a challenge with very tight US Treasury swap spreads and an unattractive euro/dollar basis swap keeping many of the European agencies away from the currency this year. Elsewhere, agencies are stepping up their preparations to follow their supranational peers in issuing bonds linked to the new risk-free rates in sterling, dollars and eventually euros as the date for Libor discontinuation approaches. Issuers are also having to cope with less information than ever before from bank syndicates as a result of increased regulation from MAR and MiFID. An initiative from the ECB, aiming to revolutionise the issuance and distribution of euro bonds has also placed the role of investment banks in the syndicate process under the spotlight. Some of the world’s leading agency issuers came together during the Global Borrowers & Bond Investors’ Forum in London in June to discuss these topics and many more in a specially convened roundtable.

The supranational and agency bond market’s love affair with green and socially themed bonds has reached a new intensity. Most large issuers now have programmes and they are deepening them with new assets. Government issuance is less advanced, but will soon overtake, as sovereigns copy the high profile, signalling deals of their neighbours. Jon Hay reports