Basis: Issuers grab the zeitgeist but bases unmoved

Cables coiled
A glance at the new issuance screens would suggest to the casual observer that August has come to an early end, but no-one has told the basis market.

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  • Issuers grab the zeitgeist but bases unmoved

  • Flows

  • New issues


Issuers grab the zeitgeist but bases unmoved

A glance at the new issuance screens would suggest to the casual observer that August has come to an early end, as weak fixed income markets and rising yields have sparked a bout of opportunistic bond-selling in EUR, USD and even GBP.


But basis swappers, though active, at least aren’t having to deal with much in the way of the thin-volume price action that can occur during Summer issuance spikes, as both the EUR/USD and the cable curves ended the day almost entirely unchanged, except for light 0.25bps dips in both ultralong ends, something sources ascribed to ‘flow’.  


CBA started the ball-rolling yesterday with a 4y €1.5bn offering that did get the belly of EUR/USD widening a touch, pushing 0.5bps lower in the morning to -28.5bps, since when it has oscillated in a narrow range. The 4y was though active again today, trading a few times at -28.25bps and -28.375bps.


Elsewhere there was a sense that some of the big issues, such as EIB’s standout $4bn 5y offering, will be hedged quietly and later, while one of the few slightly surprising parts of the basis universe was 30y cable, which traded a few times at -41.5bps as it edged lower.


GBP supply stood out with offerings and pricings in Europe’s high-yielding basket case currency from Caisse Desjardins and Deutsche Pfandbriefe, but again this didn’t result in the slight basis market volatility enjoyed during yesterday’s initial partial reopening of issuance markets.  Swiss issuance was also on a roll.



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


New issues


USD new issues:

  • The EIB today priced a $4bn 5y SOFR +33bps bond via BMO, Citi and RBC.


  • Norway’s Kommunalbanken plans a 5y USD bond issue at around SOFR +46bps via BMO, Nomura, Scotia and TorDom. Expected Wednesday.


  • Development Bank of Japan has launched a $600m, 3y Sustainability Bond at SOFR +62bps via Barclays, Citi, GS and Mizuho (B&D).


EUR new issues:

  • Danske Mortgage Bank has just priced a €1bn, long 5y Covered Bond via BNPP, BBVA, Danske, DZ Bank and Erste. Swaps +26bps.


  • Virgin Money UK (Clydesdale Bank) this afternoon priced a €500m, 5y Covered Bond at swaps +50bps via BBVA, BNPP, Lloyds (B&D), NordLB and Santander.  


  • Swedish Export Credit plans a EUR benchmark 7y bond via BNPP, Credit Agricole, Deutsche and HSBC.


  • Mizuho plans a EUR 7y Green Bond at around swaps +165bps via HSBC, ING, Lloyds, Mizuho (B&D) and SocGen.


  • Volvo Treasury yesterday priced a EUR 700m, 3y bond at swaps +40bps via BNPP, BofA, Deutsche and SEB.


GBP new issues:

  • Federation des Caisses Desjardins du Quebec is close to pricing a £500m, 3.25y Covered Bond at around SONIA +65bps via BMO, Lloyds, NatWest and RBC (B&D).  


  • Deutsche Pfandbrief has mandated Barclays, BMO, Nomura and TorDom to lead a GBP-denominated, 3y mortgage-backed Covered Bond fixed-to-floating bond ‘in the near future’.


CHF new issues:

  • Santander UK plans a CHF 310m, 3y Covered Bond at SARON swaps +19bps and a CHF 110m, 6y bond at SARON +22bps via Deutsche and UBS.


  • Korea Water Resources plans a CHF-denominated Green Bond via BNPP following investor meetings commencing today.


  • Electricite de France yesterday priced a two-tranche CHF-denominated bond consisting of CHF 200m of 2.3% Sep 2027 bonds at swaps +50bps and CHF 125m of 2.55%, Sep 2031 bonds at SARON +72bps via Commerz, Deutsche and UBS.


  • Deutsche Bahn Financial yesterday priced a Sep 2035, 1.885%, CHF 275m bond at SARON ++6bps via BNPP and Commerz.


AUD new issues:

  • Mizuho Financial has priced a AUD 400m, variable-rate Aug 2029 6.025% bond at par via ANZ, Barrenjoey Markets, Citi, Mizuho and NAB.