Swiss Francs

Vaduz-based Liechtensteinische Landesbank (LLB) kicked off Swiss franc bond issuance after an investor lunch in Zurich on Monday with its debut Sfr150m seven year senior preferred.

In a week shortened by a public holiday, the only borrower to put its head over the parapet in the Swiss franc bond market was Pfandbriefzentrale der Schweizerischen Kantonalbank, the issuance vehicle owned by Switzerland’s 24 Cantonal banks.

More evidence of the strength of demand from Swiss retail investors for attractive coupons was provided last week when Luzerner Kantonalbank (LuKB) priced an additional tier one (AT1) transaction shortly before the Easter break. Led by LuKB and ZKB (sole structurer), and priced at a coupon of 1.8%, this non-call 6.5 year deal raised Sfr250m.

Commerzbank analysts had been expecting a “very constructive market” in Swiss francs this week, bolstered by supportive cross-currency swaps and an uptick in the secondary market. It is questionable, however, if anybody foresaw the explosion of volume on Tuesday, when more than Sfr1bn ($997m) of new issuance had been priced by early afternoon.

It has been a lively start to the second quarter of the year in Swiss franc bonds, marked by geographical diversity in the international sector and a welcome appearance from an industrial borrower in the domestic market.

Following a flurry of corporate deals earlier in the month, financial institution issuers took control of the primary Swiss franc bond market this week.

Swiss franc investors leapt headlong into the Brexit turbulence on Thursday morning, giving a solid reception to the first Swissie deal of the year from a UK corporate borrower.

It has been a good week for Latin American issuers in Swissies, with two banks from the region taking Sfr400m ($398m) out of the market on Tuesday and Wednesday, bringing total issuance from the region for the year up to Sfr875m.

Two emerging market borrowers familiar to investors returned to the Swiss franc market this week, injecting some geographical diversity into the sector.

The virtual drought in international corporate issuance in the Swiss franc market belatedly came to an end on Tuesday in spectacular fashion, when BMW launched a speedily executed two-tranche issue for Sfr600m ($600m).

The past week has been the busiest of the year so far in the international segment of the Swiss franc market, with European bank issuers accounting for much of the new issue flow.

The international capital market welcomed a new supranational borrower on Monday when Bolivia-based Fonplata issued a debut Sfr150m five year bond via Credit Suisse and UBS.