Swiss Francs

Deutsche Bahn sold 10 year Swiss franc bonds on Tuesday at a price roughly in line with its euro funding levels.

The Swiss Exchange (SIX), in conjunction with major Swiss franc bond market participants, is set to launch a digital platform called Deal Pool, in the hope of simplifying processes and breeding efficiency in the market. But it will likely change the role of bank sales desks substantially.

Something strange is occurring in Switzerland, where the Swiss franc bond market is rife with both deep optimism and pessimism. Deal execution is riskier than it has been for years, but is being driven by bond buyers’ perceptions of better times ahead. Silas Brown asks whether the market is about to regain its mojo or if this is a case of jam tomorrow.

The North American Development Bank (NADB) will hold meetings in Geneva and Zurich to discuss a debut Swiss franc green bond, as the possibilities for arbitrage grows for international SSAs.

The Export-Import Bank of Korea returned to the Swiss franc bond market on Thursday, capitalising on an arbitrage window against its dollar curve.

The North American Development Bank (NADB) will hold meetings in Geneva and Zurich to discuss a debut Swiss franc green bond.

Nestlé issued Sfr1.5bn ($1.5bn) of Swiss franc bonds on Thursday. The Swiss food company proved the market is wide open for well known, high quality credits, said market participants.

If the financial arm of A2/A rated insurance firm AMP had debuted in Swiss francs six months ago, the moment would have passed without much remark. But as the chief executive, chairman and half its board were turfed out of the business under a cloud of disgrace, the timing caused quite a stir in the traditionally measured bond market.

The Swiss franc bond market showed this week that it is well insulated from the turmoil affecting the euro market as South Korea’s Hyundai Capital raised Sfr300m from a tightly priced five year bond. With cross-currency basis swaps coming down, and low new issue premiums, Zurich-based bankers are keen to showcase the pricing competitiveness as well as the stability of their market.

Hyundai Capital returned to the Swiss franc bond market after roughly four years away on Wednesday. The South Korean car company was a regular feature in Switzerland up until 2014, but as conditions grew worse for international borrowers each bond expired and was not refinanced like for like. But this is beginning to change as the Swiss market proves more resilient to European political volatility than core markets.

Polish financial institution mBank has returned to the Swiss franc bond market. Like many sold in the past few weeks, the bonds were priced at the wider end of guidance — a sign that the market is returning to more conventional spread levels, and investors are expecting higher returns.

Swiss franc bonds are frequenting treasurers’ minds again as windows for arbitrage funding return to the market. For three years, Swiss market participants have gritted their teeth as cross-currency basis swaps and attractive funding conditions in core markets squeezed supply from abroad. But this seems to be changing. Four foreign borrowers raised benchmark bonds this week, and bankers expect many more to follow before the summer lull. Silas Brown reports.