Swiss Francs

Foreign central bank action sparked arbitrage opportunities in Swiss francs to shrink in 2020, so investors took a more domestic approach. As foreign issuance dries up, so too do Swissie mandates for international desks. Frank Jackman reports.

The Swiss National Bank said it is “willing” to increase the scope of its foreign exchange interventions to keep the Swiss franc’s value down, despite the US Treasury labelling it a ‘currency manipulator’ this week.

Flughafen Zürich sold its first deal this week since it lost its double-A rating in July, finding the opportunity to price a Sfr200m bond at an “aggressive” level.

Münchener Hypothekenbank (MunHyp) made use of an impressive spread tightening in the Swiss franc market to follow up Pfandbriefbank’s monthly issue with an even tighter covered deal of its own.

Ford shrugged off its loss of investment grade status to return to the Swiss franc market this week after a 19 year absence to print a three year deal targeted at private bank investors.

Ford is set to pull into the Swiss franc bond market after a 19 year absence, having appointed a trio of banks to commence investor calls ahead of a potential deal.

French agency Caisse des Dépôts et Consignations finished its 2020 syndicated funding programme with a visit to the Swiss market this week, printing an extremely tight deal through the high quality domestic covered bond curve.

A pipeline of deals is building in the Swiss franc bond market for when the US election is concluded. Among those circling the market is Caisse des Dépôts et Consignations, which could finish its 2020 funding with a public benchmark.

THE CITY of Lugano sold a bond that has pushed the Swiss franc curve out to its farthest point this week, locking in a coupon of 0.15% for 50 years, following a similar deal for Bern last month.

Ronald Hinterkircher, who is retiring from the Swiss franc bond market after a 40 year career, has told GlobalCapital that digitalisation and the possible removal of the withholding tax for foreign investors could change the market over the next few years. But with the European Central Bank propping up the euro bond market, arbitrage opportunities for international companies in Swiss francs are vanishingly slim.

Givaudan and Nant de Drance attracted big order books this week, driven by demand from asset managers, allowing both to price Swiss franc bonds through fair value.

Raiffeisen Schweiz surpassed expectations with a self-led additional tier one (AT1) deal on Wednesday, printing Sfr525m ($572.4m) after finding strong international demand.