ZKB

Issuers and investors in the Swiss franc market are grappling with much wider spreads on domestic and foreign issuers because of the volatility around the coronavirus pandemic.

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.

Fundamenta Real Estate, the Swiss housing developer, has fixed the terms for its Sfr91.5m re-IPO on the SIX Swiss Exchange, which is expected to value the company at Sfr375m.

Sulzer sold Sfr460m ($470.6m) of Swiss franc bonds on Thursday, just months after the Swiss maker of industrial machinery raised Sfr400m across two and five years. This makes it the largest triple-B issuer of Swiss franc bonds so far this year.

Zürcher Kantonalbank (ZKB), in accordance with recent tradition, was the first canton off the blocks, opening the Swiss market with a Sfr240m ($246m) 10 year bond on Wednesday. Basellandschaftliche Kantonalbank (BLKB) was quick to follow, printing a Sfr300m nine year bond an hour later. A lack of issuance at the tail end of 2017 has buoyed the market, leaving participants hopeful of additional cash to put to work in the new year.

Emissionszentrale für gemeinnützige Wohnbauträger (EGW) issued 17 year Swiss franc bonds on Wednesday, reaffirming Swiss appetite for duration.

Swiss property investor Allreal Holding sold an eight and a half year bond to investors drawn in by the spread.

Nederlandse Waterschapsbank this week became the first European SSA to print in the Swiss franc market since 2015, followed by Municipality Finance two days later. Favourable moves in the euro/Swiss franc basis, alongside rising Swiss interest rates, opened a window for old borrowers to return.

Municipality Finance on Thursday became the second European SSA to enter the Swiss franc market this week, after Nederlandse Waterschapsbank became the first European SSA to place Swiss bonds since 2015.

Nederlandse Waterschapsbank has become the first European SSA to print in the Swiss market since 2015, citing a favourable move in the euro/Swiss franc basis swap as a reason for the return.

Flughafen Zurich, the company responsible for operating Zurich airport, offered Swiss franc bond investors a 12 year note on Monday as the market soared on Emmanuel Macron’s ascendance to the French presidency.

Swiss Prime Site, LGT Bank and the City of Zurich took advantage of a quiet market, placing Swiss franc bonds with domestic investors before Easter holidays.