Basis: CHF on a roll; Cable busy; EUR/USD flows

Swiss regulatory gnomes
The ECB may have quietened things down in issuance, but basis still felt busy. After a long pause, Swiss issuance is on a roll.

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  • CHF on a roll; Cable busy; EUR/USD flows

  • JPM on AUD/USD and NZD/USD basis jumps

  • Flow

  • New issues


    CHF on a roll; Cable busy; EUR/USD flows

    The Swiss franc new issuance market has been on something of a roll this week, after a fairly lengthy time in the background. This was brought into focus today after deals from MetLife and Barcelona-based Cellnex in 8y and 5y CHF, respectively.


    But is there more to come? One long-suffering swapper said this lunchtime that “EUR/USD and CHF/USD are both very well-offered, reflecting issuance flows.” In both bases this has been most evident in the 10y sector, where EUR/USD, he said, “has been given down to -14.125bps ahead of corporate issuance.”


    In CHF/USD he added that “there have been two deals today and on the back of those 10y has been offered down by 2.75bps to -23bps where it found support.” He said that a  move of that size, given the unspectacular size of flow, was cuckoo and “a function of an illiquid market.”  


    EUR cross-border issuance has been somewhat capped by the ECB today, which came with gifts for perpetually-greedy bond bulls in the form of a PEPP boost that saw Bunds rally by as much as 90 ticks before easing back to +40 ticks late in the day. BTPs remain more than a point higher. And given a lack of classic non-US names in USD issuance today, one theory for the busy flow across the EUR/USD curve today is that it could be linked to the latest Verizon fund raising, which has begun with a 9-tranche mega-deal in USD. EUR/USD was better offered early on, bounced a bit, and is now better offered again.


    In cable, said the above-quoted basis swapper, the revival in GBP issuance of late has been more than matched by flow, with cable basis swaps particularly busy today. He said that “it looks like the arb in cable is working well. (Borrowers) have jumped back on board after a busy January was followed by a partial rest.”


    JPM on AUD/USD and NZD/USD basis jumps

    Strategists at JP Morgan this week took a look at what it called ‘eye-catching moves in AUD/USD and NZD/USD cross-currency basis markets. It notes that the AUD/USD cross-currency basis curve shifted dramatically higher. The “NZD/USD cross currency curve saw a similarly outsized widening relative to historical norms as well, though in this case with the outperformance dominated by the longer end of the curve.”


    For context, it said that “while AUD and NZD 1Yx1Y basis widened +12 and +8bp apiece, CAD, EUR, JPY and GBP shifted by +4, -0.1, -1, and +0.6, respectively. The pacing of this price action is also notable: while AUD/USD 3M FX/OIS had been persistently narrowing since January, the broader cross currency curve had held steady, before repricing aggressively higher last week.”


    So what exactly drove this move? JP Morgan said that “it’s worth highlighting here 1) the sensitivity to carry and broader macro moves, 2) the relationship between AUD FX/OIS with USD funding markets, and 3) what was likely highly skewed market positioning heading into last week. At the very front-end, AUD and NZD FX/OIS basis had already begun to diverge from the broader DM basis complex from the beginning of the year, as reflationary trades were gathering steam. The high correlation between daily changes in spot FX and 3-month FX forward points is notable in this regard.”


    JPM notes too that “in the current environment of abundant interbank liquidity both in US dollars and other currencies, the term structure at the front of cross currency basis curves has effectively eroded, while pinning FX forward rates outside of turn episodes.”


    Finally, said JPM “it’s worth highlighting one technical factor which likely amplified last week’s moves. Reported cross currency flow data, which reflects just a fraction of overall volumes, had been fairly low for some time having seen relatively steady activity up until September of last year. The distribution of outstanding trades by their distance from current cross currency basis swap levels is revealing here – with a substantial clustering of trades within 4-10bp of the market level, the market was already susceptible to a small amount of widening triggering a wave of stops. At current levels, our estimate of the distribution of outstanding trades appears far more balanced.”



    On the SDR today EUR/USD flows were reported in:

    • 1y at -20bps

    • 4y at -9 and -8.75bps

    • 6y at -11bps

    • 8y at -12.375 and -12.875bps

    • 9y at -13.625bps

    • 10y numerous times between -14.5 and -14.875bps

    • 12y at -15.875bps

    • 14y at -16bps

    • 15y at -16.125 and -16.375bps

    • 20y at -17 and -17.125bps

    • 30y at few times between -15.125 and -14.25bps


    Also on the SDR today, flows were reported in:

    • 2y cable at -2.875bps twice

    • 4y cable at -0.75bps twice

    • 5y cable at -0.625bps

    • 7y cable at -0.25bps twice

    • 8y cable at flat

    • 9y cable at flat and at -0.25bps

    • 10y cable at -0.25bps

    • 20y cable at -0.5bps

    • 30y cable at -0.35bps

    • 7y CHF/USD at -16.25bps

    • 10y CHF/USD numerous times at -23bps


    New issues


    USD new issues:

    • UK insurer Lancashire Holdings priced a $400m 20.5y NC10.5 Tier 2 sub at 5.625% through HSBC and MS (B&D). 


    • Sumi Trust plans USD 3y bonds and 5y (Green) bonds. Leads on the 3y are Citi, Daiwa, GS and JPM, while the 5y is being sold by BNPP, BofA, CA, Daiwa and GS. 


    • Ahlstrom-Munsjo is preparing $305m 7y NC3 and €400m 7y NC3 high yield bonds at around 5% and 4%, respectively. Leads are BNPP, Danske, DNB, GS, ING, MS, NDASS (EUR), OP (EUR) and SEB.    


    • Swedbank this week priced a $750m 3y at Treasuries +55bps. Leads are BofA, Citi, GS, JPM and RBC.


    EUR new issues:

    • Victoria plc, a UK manufacturer, earlier this week priced €250m 7y NC3 senior secured bonds around 3.75% through CS (GC/B&D), HSBC (GC), ING and NatWest.


    GBP new issues:

    • RBC has priced a £500m, 1y, SONIA +100bps FRN at 100.9368. Self-led.


    • NRW.Bank has priced a £300m, 0.5% Dec 2026 bond at gilts +29bps via Barclays, BofA and HSBC.


    • KfW yesterday priced a £500m tap of its 1.375%, Dec 2024 bond at gilts +20bps via BofA, Deutsche and NatWest (B&D).


    • Kuntarahoitus yesterday priced a £250m, 0.375%, Dec 25 bond at gilts +25bps via Citi, Nomura and RBC.


    SEK/NOK/DKK new issues:

    • Rentenbank has priced a NOK 1bn, 1.25% Mar 2026 bond at 99.669 via DNB.


    • Bank Norwegian yesterday priced a SEK 300m, 4y NC3 STIBOR +140bps FRN via SPBM and Swedbank.


    CHF new issues:

    • MetLife Global has priced a CHF 230m, 0.15%, Sep 2029 bond at swaps +28bps via BNPP, Credit Suisse and Deutsche Bank.


    • Barcelona-based Cellnex yesterday priced a CHF 150m, 5y, swaps +135bps bond via Commerz and Deutsche.


    AUD new issues:

    • BNG Bank NV last night added AUD45m to its 3.25% Aug 24, 2026 Kangaroo Bond. The tap was led by Mizuho and it took the issue size to AUD445m.