Swiss Francs

Having dropped off in early March, Swiss franc issuance has bounced back in the last fortnight, buoyed by returning investors flocking to low investment-grade rated borrowers, like triple-B rated cement manufacturer LafargeHolcim, and piling into a record-breaking foreign covered bond.

Issuers and investors in the Swiss franc market are grappling with much wider spreads on domestic and foreign issuers because of the volatility around the coronavirus pandemic.

Green deals from Hypo Vorarlberg and Russian Railways were sold in Swiss francs this week in what were immensely tricky conditions. The market was awash with deals in January and February, but many feel the spread of coronavirus will bring a halt to the momentum moving into March.

Syngenta, the Swiss agrichemicals company, on Tuesday sold its first Swiss franc bond since being acquired by China National Chemical Corp (ChemChina) in 2017. But other mandated deals hang in the balance as the Covid-19 coronavirus spreads across Europe.

Russian Railways is embarking on a roadshow to market the first ever green Swiss franc bond from Russia, even as fears of the spread of the Covid-19 coronavirus continue to infect EM bond trading.

Intense demand in the Swiss franc bond market for any asset with a positive yield — or even anything yielding more than the penal negative rates on cash — gave a varied group of issuers this week execution that pushed the boundaries — bigger, faster and tighter.

A pair of investment grade issuers made rare appearances in niche currency bond markets this week. Deutsche Telekom returned to the Swiss franc market after a 10 year absence, while Hitachi Capital UK made its debut in rand.

The Swiss franc bond market has had a roaring start to the year, which bankers suggest may be a sign Swiss investors are switching from equity to debt. This week’s standout trades came from Hyundai Capital, National Australia Bank and Chilean financial services company Tanner, while Münchener Hypothekenbank sold a first green Swiss franc bond on Thursday.

A diverse combination of an international historical stalwart and a handful of usual suspects from the domestic market ensured a solid start to the year for the Swiss franc bond market.

The Swiss franc bond market has been able to withstand — just — the destructive forces of negative rates and yields and is looking forward to a new year in which green structures are set to blossom. Philip Moore reports

Building on the success of last week’s multi-tranche Sfr1.1bn ($1.1bn) trade, Pfandbriefbank (PS Hypo) rounded off its funding for 2019 on Monday, with a low-key two-tranche Sfr310m issue.

Compelling evidence emerged this week showing how much liquidity local investors are still looking to deploy in the Swiss franc market as the year’s end looms. On Monday, it took just 45 minutes for books to open and close on three clips of Pfandbriefbank paper.