EUR Swaps: Steeper as EU 30y tap announced

Steep curve 9 Nov 2020
The swap curve steepened up a touch as the EU announced plans to tap 30y via syndication.

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  • EU 30y tap announced
  • Enter 10s/30s steepeners - NatWest
  • New issues


    EU 30y tap announced
    The European Union announced today it will target the longer-end of the curve in upcoming supply, as expected. The issuer said it will tap its Mar 2053 bonds via syndication on Tuesday through BNPP, JPM, NatWest, Nomura and UniCredit.

    In the market, the long-end of the euro swap curve steepened up to -50.75bp (+1.5bp) before paring back to -51.25bp last. “The reaction, or lack of it, suggests it was expected,” suggested one euro swapper.

    Elsewhere, global fixed income is in retreat with the 10y Bund future last down 30 ticks and the 10y yield marked around 2.20% (+2bps), while the EuroStoxx has gained +0.5%. In inflation markets, the front-end has nudged higher with the EUR 1y HICP swap marked up 5.75bps at 2.42%.

    Bund asset swap spreads are wider across the curve despite several banks working on new issues across the 3y to 5y sector including NAB and Commerzbank. “We haven’t seen too many offers coming in yet,” reported one trader, still he noted that receiving interest could appear later in the session.

    Last ASW prices were Schatz at 68.0bp (+2.5bp), Bobl at 64.2bps (+1.3bp), Bund at 62.6bps (+1.2bp) and Buxl at 27.5bps (+1.8bp).


    Enter EUR 10s/30s steepeners - NatWest
    Strategists at NatWest recommend fading the recent flattening in long-end EUR. It enters EUR 10s/30s swap steepener at -52.25bps and targets -35bps with 3m carry +1bp. The bank writes:


    • “The dovish BoJ, then the more hawkish ECB, the French 30y syndication no-show and 10s/30s bunds reaching flat all pushed the long end substantially flatter. We’d feel more confident if Buxl open interest had fallen by more in the rally that followed the bund auction. French 30y supply remains a risk for next week. Late January is the normal moment.

    • “10s/30s looks very flat compared to gilts and treasuries. Swaps still look the ideal to way to express the steepener since long end receiving has slowed down from last year and attractive-looking long-end asset swaps may draw more buyers given how much rates have falling since the New Year.”


    New issues

  • European Union announced today it plans to tap its 3% Mar 2053 bonds via syndication on Tuesday. Leads are BNPP, JPM, NatWest, Nomura and UniCredit.

  • CoE Development Bank is holding investor calls this week through CA and DB.

  • Prologis is pricing up to €1.25bn (max) in 7y around swaps +155bps and 20y around swaps +215bps through BNPP, HSBC (B&D), ING, JPM and Commerzbank.

  • DKB is pricing €500m 12y Social Housing Covered at swaps +22bps through ABN Amro, BayernLB (B&D), Commerzbank, CA, NordLB and UniCredit.

  • Ile de France is pricing €600m long 8y Sustainable at OATs +46bps through BofA, CA, Natixis and SocGen (B&D).

  • LBP Home Loan SFH is pricing €1.25bn 8y Social Covered at swaps +27bps through BBVA, Commerzbank (B&D), CA, IMI, ING and La Banque Postale.

  • Lower Saxony is pricing €750m long 8y at swaps -1bp through Deka (B&D), Helaba, HSBC, NordLB and TD.

  • Hypo Tirol Bank is pricing €300m 5y Green Covered at swaps +29bps through ABN Amor, Deka, Erste, LBBW and RBI.

  • Kutxabank is pricing €500m (max) 5y NC4 around swaps +130bps through Barclays, CA (B&D), JPM and Santander.

  • Italmatch plans €700m 5y NC2 and 5y NC1 FRN through BNPP, GS (B&D), Citi, CA and UniCredit.

  • Verisure plans €350m 5y NC2 through GS (B&D), BofA, JPM, Barclays, CA, CS, DB and MS.

  • Hypo NOE is pricing €500m (max) 4y Green around swaps +125bps through BayernLB, BNPP, Danske, Deka, DZ and Erste.

  • NAB is pricing €1.5bn 3y Covered at swaps +25bps through Barclays, BNPP, Commerzbank, HSBC and NAB.

  • Commerzbank plans EUR 3.25y Covered through itself.

  • RLB Oberoesterreich plans EUR 3y Covered through CA, Erste, ING, LBBW and Raiffeisen.

  • Slovenska Sporitelna is pricing €500m (max) 3y Covered around swaps +35bps through Commerzbank, Erste (B&D), Helaba, LBBW and NordLB.

  • Oldenburgische Landesbank plans €300m (min) 3y through Barclays, BNPP, DB, GS and UniCredit.

  • PKO plans EUR 3y NC2 through Erste, PKO, Santander, SocGen and UniCredit.