Structures - USD
MTNs this week saw influx of zero-coupon callables, with the more recent ZCs seeing much higher IRRs. Dual CMS rangers also saw plenty of new notes.
Structured notes has seen good flows in the past week – as investors clamor to replace redemptions, despite very trying conditions in the market.
Despite volatile conditions and rapidly sinking yields, MTNs still saw a fair amount of ZC callables , led by BNS, BMO, Citi. KfW, IBRD callables
Amid the rate and equity turmoil, structured note activity threaded the window and took advantage of nascent periods of stability. ZC flow revived.
The G7 echoed recent central bank statements but stock futures were mixed. Banks discuss whether rates will hit the zero bound.
Only a $175m 40y NC5 Formosa from Santander came in the longer maturity ZC callables this past week. Dual rangers and non-inversions saw some activity
The switch from EONIA to €STR discounting threatens to create big windfalls vs losses across EUR interest rate option desks.
This past week saw the second corporate Formosa zero-coupon callable of the year as AT&T sold a $2.995bn 30y NC5 fixed callable Formosa.
Verizon came with a $2.385bn 40y NC5, the first fixed callable Formosa by a corporate this year. ZCs resumed with just under $1bn in total.
Supply and viral fatigue weighed on haven assets. FRA-OIS spreads stabilized after recent tightening. Heavy Formosa issuance continued.