EUR Swaps: Flattening back as German 30y Green bond lands

German flag and parliament
The main event in euros today has been Germany’s sale of €4.5bn 30y Green bonds via syndication.

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  • German €4.5bn 30y Green draws €29bn orders
  • Dovish ECB - NatWest
  • New issues

    German €4.5bn 30y Green draws €29bn orders
    The main event in euros today has been Germany’s sale of €4.5bn 30y Green bonds via syndication through Barclays, BNPP (B&D), DB, GS, JPM and Nomura. The latest order book size was reported to be above €29bn while the price has been set at Bund 1.8% Aug 2053 -0.5bp.

    “I wouldn’t say it was totally expected,” said one market participant, reflecting on yesterday’s announcement. As for today’s price action, “It went a touch better bid after the spread was set but is still close to the reoffer.”

    Across the swap curve, EUR 10s/30s has flattened back by -1bp to -34.25bps after steepening up around +2bps yesterday following the announcement. 

    At the short-end of the curve, the big move today has been in GBP where SONIAs have plummeted around -20bps (having already lost -10bps yesterday) after UK unemployment fell and wages increased by 6.5% vs 6.1% Bloomberg consensus. In euros, the reaction has been muted with white Euribors last down by -0.5bp to -2bp and reds down by -1bp to -2.5bps.

    Meanwhile, today’s data in euros included better-than-expected German ZEW numbers as Survey Expectations printed at -8.5 vs -13.5 Bloomberg consensus. Traders now await US CPI data. 

    Elsewhere, Bund asset swap spreads are a touch tighter with a handful of banks set to price new issues including ABN Amro and BBVA. Last prices Schatz at 72.0bps (-0.1bp), Bobl 69.5bps (-0.4bp), Bund at 64.8bps (-0.2bp) and Buxl at 28.5bps (unch). The 10y Bund future was last up +10 ticks while the Euro Stoxx has gained +0.27%.


    Dovish ECB and 2s/5s - NatWest
    In its weekly rates strategy NatWest expects the ECB to be on the dovish side of expectations. It also expects the forecasts to recast views of hawkish risks for the summer. In terms of strategises, the bank writes:

    • “We continue to approach the front-end from the steepening side. With the front-end fully priced for the ECB, we think 2s/5s should works as a bearish trade. If that is wrong (the risk case for us) we think it’s more likely to be because rates will fall more quickly globally.

    • “The forward path beyond 2y looks reasonably priced across a range of economic outcomes. The upside here would be in the front-end. Tightening in 2y asset swap (which we had expected) leaves us with no strong view on asset swaps in this sector to overall on a steepening view.”


    New issues

  • Germany is pricing EUR 30y Green at Bund 1.8% Aug 2053 -0.5bp through Barclays, BNPP (B&D), DB, GS, JPM and Nomura. Latest order book size reported to be above €29bn.

  • ABN Amro is pricing EUR 3.5y around swaps +85bps and 10.25y NC5.25 around +270bps through ABN Amro, BofA, DB, Natixis, NatWest and UBS.

  • State of Saxony-Anhalt is pricing €500m (max) 10y Social around swaps +1bp through Deka, NordLB, Rabobank (B&D) and UniCredit.

  • Argenta Spaarbank plans to sell €500m (max) 5y Covered through Barclays, Belfius, LBBW and Natixis.

  • UniCredit Czech/Slovakia is pricing €500m (max) 5y Green Covered around swaps +85bps through UniCredit (B&D), Commerzbank, Danske, Erste, ING and LBBW.

  • BBVA is pricing €750m-€1bn Perp NC5.5 AT1 around 8.75% through Barclays, BBVA (B&D), BofA, Citi, GS and Natixis.

  • Bank of Cyprus is pricing €220m (max) perp NC5.5 AT1 around 12.5% through BofA, GS (B&D), BNPP and JPM.

  • EAA is pricing €500m (max) 3y at swaps -12bps through Barclays, CA and Deka.