Basis: Digestion the priority in distracted market

Belly
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The cross-border new issuance market rather than picking up as this week has worn on, as some had expected earlier in the week, seems to have slowed.

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  • Digestion the priority in distracted market

  • Flow

  • New issues:

 

 

Digestion the priority in distracted market

The cross-border new issuance market rather than picking up as this week has worn on, as some had expected earlier in the week, seems to have slowed down, with matters of digestion said to be the principle barrier to more fluid movement.

 

“It’s been quite a volatile, but bearish week in the underlying markets like Bunds (10y yields +13bps over five days) and especially gilts (10y yields in a 24bps range this last week),” said one basis swapper at an active market participant today.

 

“The big picture is that data and some central bankers are driving core market yields higher but the market doesn’t totally believe that more hikes need to be priced in. So at some point yields will settle and that will see a spike in issuance again at more generous coupons, but until then, there is a fair bit of recent issuance-related (basis) flow, and price action, to digest.”

 

Today has seen the long ends of both cable and EUR/USD catch the eye again, with the 30y cable mid currently +0.125bps on the day at -24.375bps, which is plus 2bps since Friday’s close. In EUR/USD the 30y has edged 0.625bps higher to -12bps today, also +2bps since the end of last week, while in the same time 30y gilt yields are +15bps and 30y Buxl yields  +10bps.

 

The above basis swapper said that “the sell-offs in long gilts and Bunds triggered some CVA/XVA-type hedging in 30y cable and EUR/USD (pushing them higher) but that’s faded now I think.”

 

Indeed, traders struggled to identify flow beyond 10-years today so far today, while busy areas included 5y cable at -14.875bps and 6y at -15.5bps, both of which traded a couple of times at least. Elsewhere, 5y SEK/USD stood out, trading a few times at -14bps, which on the face of it seems a little short to be related to the EIB’s 7-year SEK bond sale today.

 

Flow

Basis trades on the SDR can be seen here: Total Derivatives SDR.

 

 

New issues

 

USD new issues:

  • ExIm Bank of China has priced a $250m, 5.076%, Mar 2026 FRN at SOFR +50bps via Citic.

     

  • OKB last night priced a $1bn 5y deal via BofA, DB, JPM and RBC.  Aa1/AA+.  Priced at MS + 36bps.

     

  • CICC HK Finance yesterday priced a $1.25bn, 5.49%, Mar 2026 bond at USTs +110bps via global coordinators CICC, China Galaxy, Citi and Standard Chartered.

 

EUR new issues:

  • US industrial gases company Air Products has mandated Citi and SMBC to lead a 12y EUR-denominated bond issue following investor calls.

 

GBP new issues:

  • The IADB is close to pricing a £400m, Dec 2029 Sustainable Bond issue at gilts +47bps via Barclays, Deutsche and HSBC.

 

SEK, DKK, NOK new issues:

  • The EIB has priced a SEK 1.5bn, 2.875% 2030 bond at mid-swaps +23bps via Swedbank.

 

CHF new issues:

  • Cie Financement Foncier has priced a CHF 365m, Jun 2028, 1.92% bond at SARON +13bps via UBS.

 

 

AUD new issues:

  • Intesa SanPaolo last night priced a AUD 100m, 4.65%, Feb 2025 bond at par. Self-led.

 

CNY new issues:

  • France’s AFD has priced a CNY 1bn, Mar 2026, 2.85% bond at par via Natixis.
 

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