TD Securities

Yield starved investors are showing growing interest in picking up New Zealand dollar paper, looking to stock up on bonds denominated in the currency of the only developed economy enjoying rising interest rates. Rabobank and Commonwealth Bank of Australia both sold Eurobonds in the currency this week, drawing attention from institutional investors as well as the retail buyers that normally dominate the asset class.

The European Investment Bank, which is over 75% funded for the year, went strategic this week by dipping into South African rand with a curve extending eight year deal. Elsewhere, the International Finance Corporation and KfW picked up funding in Australian and New Zealand dollars.

The Inter-American Development Bank took advantage of strong demand for dollar paper this week to sell its largest dollar benchmark, while Bank Nederlandse Gemeenten also visited the market, suggesting that appetite remains robust despite many investors getting ready to embark on summer holidays.

Rating: Aaa/AAA/-

Supranationals and agencies are expected to look to non-core currencies — particularly Australian and New Zealand dollars — in the coming weeks as they hunt for attractive funding opportunities. Well-funded issuers may prove reluctant to sell large deals in benchmark currencies, and could instead follow the example of Bank Nederlandse Gemeenten which sold a pair of Australian dollar deals this week.

Searing domestic demand for supranational paper allowed the World Bank to sell the largest Kangaroo bond in four years on Tuesday. The deal was the issuer’s second non-core dollar blowout in as many weeks, following its execution of the largest ever Kauri deal on June 13.

European Investment Bank and Export Development Canada showed their Australian dollar appeal this week, selling hefty deals in the belly of the curve. Japanese demand propelled the EIB to success, allowing the issuer to sell its largest Kangaroo deal in three years.

The Province of British Columbia will make its Kangaroo debut on Friday, drawing strong demand from investors. The deal will round off a hot week for issuance for Kangaroos, during which the Asian Development Bank sold the largest such deal from a sovereign, supranational or agency in almost three years.

After weeks of limited issuance, the dollar market is primed to spark into life next week as investors clamour for a chance to use up accumulated cash. The European Investment Bank and Municipality Finance are tipped to launch deals, while Ontario stole a march on other issuers by mandating banks on Thursday afternoon for a benchmark.

Land Saxony-Anhalt could follow Land Nordrhein-Westfalen’s lead and print more private placements in niche currencies this year, according to MTN bankers. Land NRW sold the first Brazilian real deal from a German sub-sovereign this week.

Rating: Aaa/AAA/-

Inter-American Development Bank treasurer Søren Elbech signed off with a final benchmark before he moves to Danish wind turbine manufacturer Vestas at the end of the month, raising $2bn with a July 2017 global bond on Wednesday. Despite the deal being slightly undersubscribed, bankers away from the trade were impressed that the supranational was able to raise so much cash at a near rock-bottom yield.