TD Securities
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Public sector borrowers wrapped up a trio of short end dollar trades on Tuesday, with the tightest issuer able to grind in pricing to the lowest level from an SSA this year and the higher yielding names finding ample demand despite ending up at similar spreads. SSA bankers are confident that the strong conditions will also ring true at the long end for KfW, which has mandated for its first 10 year dollar benchmark in nearly three years. -
Kangaroo trades from KommuneKredit and Oesterreichische Kontrollbank (OeKB) suggest long end demand will hold pace in the Australian dollar market this week. This comes despite a spate of bad weather causing transport disruption in Tokyo, where many key investors in the market are based.
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Public sector borrowers are pouring into the three year part of the dollar curve after a series of issuers printed strong deals in the tenor last week.
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Sterling conditions are searing hot for public sector borrowers, with records breaking left, right and centre. And despite investors taking large volumes out of the market, SSA bankers are confident that more supply can be handled.
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Strong moves in the Mexican peso and the peso/dollar basis swap have ignited investor demand for bonds in the currency from SSA issuers that can offer a pick-up over govvies.
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The International Finance Corporation on Thursday offered a solid helping of three year supply to a dollar market that has so far this year been dominated by five year issuance. The issuer was rewarded with a well oversubscribed book, with bankers away from the deal suggesting central banks would have played a large part.
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Dollar SSA deals are showing little signs of a hangover from a public holiday in the US on Monday, with all three of Wednesday’s trades well over subscribed and pricing inside guidance.
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Big central bank and bank treasury demand, alongside good liquidity in the sterling/dollar cross currency basis swap and issuers’ willingness to print large deals, are driving the strongest ever start for the sterling SSA market — and a record trade for World Bank.
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The World Bank is set to become the latest public sector borrower to visit the sterling market, following the European Investment Bank’s £1bn trade on Tuesday.
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SSA issuers are able to offer a pickup against Mexican government bonds for the first time "in memory", according to one head of local currency bonds.
