EUR Swaps: New issuance dominates amid US holiday
New issuance dominates amid US holiday
New issuance was the main focus for euro traders today amid the US Presidents Day holiday.
Among the issuers are several corporates including Tesco, Kering, Roche and Unilever plus Australia's NBN. Also today, ESM is pricing a €3bn 5y while CADES has mandated banks for EUR 7y Social bonds. “It’s kept the market ticking over in an otherwise quiet session,” said one euro swapper.
Bund asset swap spreads are a touch wider across the curve with last prices Schatz at 66.3bps (+0.9bp), Bobl at 64.3bps (+0.7bp), Bund at 59.3bps (+0.5bp) and Buxl at 26.8bps (+0.9bp).
Meanwhile, one trader agreed that a characteristic of new issuance over recent weeks has been a widening bias in asset swap spreads as investors buy new deals via ASW, “It certainly seems that way,” he said.
Elsewhere, the Bund future has so far traded a narrow 41 tick range and was last up 20 ticks at 135.09 while the 10y yield was marked unchanged at 2.44%.
The euro swap curve was slightly flatter across the belly with last prices 2s/5s at -38.5bps (-1bp), 5s/10s at -13bps (-0.5bp) and 10s/30s at -52bps (unch).
Looking ahead, euro final inflation data is published on Thursday, “I don’t think there’s scope for too much of a shock, but you never know as markets have been exhibiting intra-day volatility recently,” said one dealer.
In sovereign supply, Spain has announced plans for a EUR long 15y syndication through DB, JPM, MS, Nomura, Santander and SocGen.
Hold Schatz ASW tightener - Commerzbank
In its weekly rates research Commerzbank looks at trends in the repo market and holds its Schatz ASW tightener. It writes:
- “The seamless transmission of the 50bp hike into Bund repos is being compounded by the ECB's very generous forward fixing of the price of sovereign cash. As a consequence, the broad cheapening of German spot collateral is accelerating and our specialness spread vs. €STR has compressed to the tightest level since Dec-21.
- “Resilient Schatz-ASW spreads and still elevated repo scarcity term premiums point towards second thoughts on the ECB's sovereign deposit remuneration, however. We doubt that these will materialise and reiterate our ASW tightener. In futures, net basis are converging towards zero as usual at this stage of the contract cycle without CTD (tail) risks.”