Swiss Francs

Well over Sfr1bn ($1bn) of Pfandbriefe and covered bonds was printed within three days this week, rounding off what bankers say turned out to be a surprisingly good first half of the year for the Swissie market.

Credit Suisse Switzerland issued its debut covered bond from its newly structured programme on Wednesday, achieving a very solid outcome in a short time frame. And the Swiss franc-denominated covered bond was quickly followed by another from the UK’s Nationwide Building Society.

Activity in the FIG sector in Swiss francs shifted from the international to the domestic market this week, with a little over Sfr850m ($857m) of new supply priced on Tuesday alone.

Zuercher Kantonalbank added momentum in the Swiss franc market for sustainable bond issuance at the end of last week, when it launched its second green bond. The proceeds of this Sfr200m ($198m) trade are for refinancing existing and future facilities under its Umweltdarlehen (environmental loans) programme, which dates back to 1992.

Korea Railroad Corp turned west on Monday, marketing a six year bond to Swiss investors.

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.