Swiss Francs

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.

It is hard to think of a more suitable candidate to have opened the Swiss franc market for additional tier one (AT1) issuance to foreign borrowers than Munchener Hypothekenbank (MunHyp). With a loan book in Switzerland of just over Sfr5bn ($5.01bn), the Munich-based mortgage bank is one of the few international borrowers with a natural funding requirement in Swiss francs, which is why it has been a prolific issuer in the currency over the past year.

Pfandbriefzentrale issued its largest ever bond this week, a Sfr1.386bn ($1.398bn) triple-tranche deal that included a Sfr980m 12 year tranche that was itself the largest single issue in the Swiss franc bond market this year.

The Swiss franc primary bond market enjoyed a week of notable firsts, new records and diversity this week across the corporate, cantonal and financial institutions sectors.

A rise in the Swiss swap curve and an improvement in cross-currency dynamics helped momentum created by a well-received Citi trade last Friday to be carried over into this week. Three familiar FIG names returned to the market on Monday, including Chile’s Banco de Credito e Inversiones (BCI).

Switzerland’s largest private and commercial vehicle leasing company starred in an otherwise quiet market for Swiss franc issuance this week.

Swiss investors’ thirst for yield was quenched in some style at the end of last week, when Russian Railways printed the largest Swiss franc transaction of the year from an emerging market borrower.

The Swiss franc new issue market sprang back to life this week, led by FIG borrowers.

Korean National Oil Company (KNOC) this week delivered the first post-summer Swiss franc bond from Korea, achieving a record low yield despite coming just ahead of a Swiss National Bank (SNB) policy announcement.

Bank of the Philippine Islands issued on Thursday a green bond in Swiss francs, which came at a negative yield.

Credit Suisse this week made “an important step in the transition away from Libor”, the bank claimed, as it placed an AT1 that it said was the first public issue in the Swiss franc market to use an alternative benchmark rate.