• The mood in the primary markets was muted yesterday, which is difficult to say when collective orderbooks in € IG topped €167bn (skewed by the EU’s €11bn dual-tranche), yet that was the case.
• Government bond yields continued to soar, as did credit indices & oil. Deals were getting done, though pure corporate credits were again notably absent, with execution risk too high.
• Focus remains on Central Banks: the Fed later today, the Bank of England tomorrow & the BoJ on Friday. The market will be less focused on the expected 25bp hike from the Fed today (its 1st hike since July 2023), & more on what Fed Chair Kevin Warsh has to say about the trajectory of rates moving forward.
• Despite the negative underlying tone yesterday, € IG still managed to price €17.925bn from 8 deals (6 x FIG & 2 x SSA) via 12 tranches.
• No activity in Sterling (£), Swiss Franc & the US$ Reg S markets.
• With the Fed not making any statements until after the European close, today should be relatively busy in the primary markets, with all but 1 x SSA deal in the pipeline likely to come today - including corporates.
• Brent Crude remains elevated, currently trading at c.$108.1 (versus c.$107.56 this time yesterday).
• The VIX too is holding at its higher level at 17.2 (versus 17.1 this time yesterday).
• iTraxx Europe & iTraxx Senior & Sub financial indices (& change from this point yesterday) go into the open at 54.877 (+1.14%), 57.357 (+1.46%) & 92.517 (+1.71%) respectively.
• Pipeline: The European IG pipeline has 6 € & 1 Swiss Franc trade currently.
  • 4 x € Corp
  • 2 x € SSA (1 x EuGB - investor calls conclude 17th)
  • 1 x Chf Corp

Contact Stuart Aylward with questions or comments on stuart@creditflowresearch.com

Key € IG Supply Stats for yesterday

• Corporate
  • Total IG: €0
  • Avg. tranche size €0
  • Avg. IPT to Pricing NA
  • Avg. cover NA
• FIG
  • Total IG: €6.425bn
  • Avg. tranche size €714m
  • Avg. IPT to Pricing -1.33 (covered) - €750m
  • Avg. IPT to Pricing -25.86 (unsecured) - €5.675bn
  • Avg. cover X 2.76
• SSA
  • Total IG: €11.5bn
  • Avg. tranche size €3.833bn
  • Avg. IPT to Pricing -1.33
  • Avg. cover X 9.85

Geo-Political News

• Ukrainian ceasefire proposal conditions set by Kyiv. Ukrainian President Volodymyr Zelenskyy confirmed that Ukraine remains open to supporting a US-backed proposal aimed at halting long-range military strikes on energy infrastructure across both Russia & Ukraine. However, Kyiv explicitly conditioned its participation on the US guaranteeing that Russia demonstrates genuine commitment to concluding the broader military conflict. Meanwhile, tactical operations continued to escalate across eastern combat zones, alongside targeted air strikes damaging critical urban logistics hubs near Kyiv. International observers remain sceptical regarding Moscow's willingness to abide by localised truces without comprehensive territorial concessions.
• NATO Secretary General meets UK PM Andy Burnham today in London to address strategic defence capabilities & transatlantic security posture. Discussions will focus on the UK's commitment to incremental defence expenditure target trajectory toward 3.5% of GDP, as well as joint responses against persistent Russian hybrid warfare & shadow fleet activity across European maritime zones. NATO Secretary General Mark Rutte is expected to praise the UK's serious approach toward military modernisation & European security leadership within the broader alliance framework. The summit underlines London's effort to align domestic defence industrial policy with NATO structural goals while maintaining sustained operational support for Ukrainian sovereign defence initiatives.
• UK explores joining Canada-led global defence bank. British government officials confirmed that the UK is actively exploring participation in the Defence, Security & Resilience Bank, a multinational lending institution spearheaded by Canada to finance long-term allied military rearmament. The proposed framework aims to channel low-cost capital & guarantees to defence contractors across NATO member states, assisting nations in reaching heightened defence expenditure thresholds amidst growing global security threats. UK PM Andy Burnham & Canadian PM Mark Carney are set to discuss the financing initiative during bilateral meetings today. UK officials stressed that while discussions remain at an exploratory stage, participating in the lender could complement existing British multilateral procurement programs & bolster sovereign defence production capacity.
• Dutch railway disruption raises sabotage fears. Major infrastructure outages paralysed large sections of the Dutch rail network ahead of the formal parliamentary opening in the Netherlands. Railway infrastructure manager ProRail confirmed that technical teams are actively investigating potential deliberate acts of physical or digital sabotage following sudden, widespread system failures. The incident underscored the expanding vulnerability of crucial public transit networks across Western Europe during periods of heightened geopolitical friction. Government officials refrained from attributing responsibility immediately, pending detailed forensic assessments by domestic security agencies.
• Saudi Arabian base targeted in drone strike. A coordinated barrage involving dozens of offensive drones & ballistic missiles targeted a prominent military installation in southern Saudi Arabia, according to claims by Yemen's Iran-backed Houthi movement. The regional military coalition confirmed that the defensive interception of incoming air threats prevented major destruction at the installation, though regional civilian injuries were recorded nearby. The escalating long-range engagement underlines persistent regional volatility & the threat posed to critical cross-border logistics hubs.
• US export restriction concerns push up oil prices. US Interior Department leadership indicated that enacting bans or statutory limits on US crude exports would fail to alleviate domestic consumer fuel pricing pressures amidst broader military tensions involving Iran. Global energy markets reacted sharply to continuous Middle Eastern supply anxieties, driving Brent crude toward record multi-month highs. Energy policy debates in Washington emphasise balancing strategic reserve preservation against international market stability requirements. Market analysts highlight that constrained refining margins & regional shipping bottlenecks are compounding global spot price inflation, creating severe macroeconomic headwinds across major net-energy importing nations in Western Europe & Asia.
• Devolution political shift across United Kingdom regions. The leaders of Wales, Scotland, & Northern Ireland jointly executed a memorandum asserting that central authorities in London lack constitutional standing to impede democratic self-determination initiatives. For the first time since the inception of regional devolution, all 3 subnational administrations are simultaneously led by political figures pursuing independence or constitutional separation from the UK. The unified declaration presents an unprecedented legal & constitutional challenge to the territorial sovereignty of the state. Strategic friction over central fiscal allocations & post-devolution legislative powers continues to exacerbate administrative division between national authorities & peripheral governments.
• Japanese military reconnaissance aircraft crashes off coast. The Air Self-Defence Force of Japan confirmed that an unmanned high-altitude reconnaissance aircraft vanished over the Sea of Japan during a routine operational assignment. Floating wreckage retrieved near western territorial waters led defence authorities to conclude that the strategic surveillance platform suffered a catastrophic inflight incident & crashed.

Markets

• US Equity markets closed in the red yesterday, weighed down by escalating geopolitical risk in the Middle East & rising treasury yields. Tech stocks spearheaded the downward pressure, dragging the Nasdaq lower by 0.78% to 25,982. Broader market sentiment reflected defensive positioning as investor enthusiasm cooled, causing the S&P to dip 0.45% to 7,586 while the Dow surrendered 0.63% to close at 52,093.
• Asian Equity bourses have all flipped into the green with modest gains across major regional benchmarks. Optimism surrounding local tech earnings & stabilising domestic currencies supported regional risk appetites, lifting the Kospi 0.79% to 6,679. The Nikkei is up 0.24% to trade at 63,636, benefiting from moderate currency depreciation which cheered export-oriented industrial conglomerates. Meanwhile, the Hang Seng edged upwards by 0.04% to 24,677 as mainland regulatory policy updates provided a mild tailwind despite ambient global energy volatility.
• European & UK Equity bourses are poised for a cautious start today, reflecting modest divergence across regional futures contracts. Sentiment remains muted amidst sovereign bond market volatility & geopolitical concerns over potential energy supply bottlenecks. Early market indicators show Dax Futures edging up by 0.13% & FTSE Futures up 0.20%, suggesting modest buying interest in heavy industry & resource shares. Conversely, CAC 40 Futures indicate weaker sentiment, declining 0.35% ahead of the cash open.
• UK & Eurozone Bond Markets sovereign bond yields face lingering upward pressure, driven by stubborn global energy inflation & firm central bank messaging surrounding monetary policy restriction. Sovereign fixed income markets remain tightly focused on policy guidance, with market participants eagerly awaiting the Fed rate announcement today & the BofE rate decision tomorrow to clarify international interest rate trajectories. Fiscal policy uncertainty & sovereign issuance supply continue to weigh on European paper, pushing the 10yr Bund yield to 3.536% & the 10yr Gilt yield to 5.385%.
• Currency Snapshot: 
  • Sterling is trading at 1.348 against the US Dollar & 0.856 against the Euro, supported by elevated yield dynamics on UK paper amidst persistent inflation sticky points.
  • Euro stands at 1.154 against the US Dollar & 0.945 against the Swiss Franc, reflecting subdued growth expectations across continental economies counterbalanced by steady central bank policy expectations.
  • Swiss Franc trades at 0.819 against the US Dollar, continuing to draw safe-haven support from global trade tensions & Middle Eastern geopolitical disruptions.

Economic Data (Western European Today)

Govt Bond Auctions (Western European Today)

Holidays

• There are no public or national holidays scheduled across the UK, & the Eurozone this week. The next major public holidays are:
  • Germany - 3rd October (German Unity Day)
  • USA - 12th October (Columbus Day / Indigenous Peoples' Day).
  • Spain - 12th October (National Day of Spain)
  • Eurozone - 1st November (All Saints Day)

Pending Deals & Mandates

Euro (€)

• 14th September: Saab AB (rated BBB+ by S&P), a Swedish defence & security company supplying products, services & systems to customers worldwide, has mandated Citigroup, Crédit Agricole CIB, Deutsche Bank, & SEB as Joint Bookrunners to arrange a series of fixed income investor calls on Monday, September 14th & Tuesday, September 15th. Deutsche Bank coordinated logistics. Having engaged with north of 75 investors, an inaugural €300m (wng), senior unsecured, Reg S Bearer, 7yr is expected to follow, as soon as Wednesday the 16th September, subject to market conditions.
• 14th September: Hella GmbH & Co KGaA (exp. Issue ratings of Ba1 / BBB- by Moody’s & Fitch), a leading developer & manufacturer of lighting, electronic components & systems, has mandated Deutsche Bank, Helaba, LBBW & UniCredit as Joint Bookrunners to arrange a series of fixed income investor calls on the 14th & 15th September. Helaba is coordinating logistics. A €300m (wng), 4yr, Senior Unsecured, Reg S bearer bond may follow, subject to market conditions.
• 14th September: Tornator Oyj (exp. Issue rating of Baa3 by Moody’s), a leading European forestry company specialized in sustainable forestry, mandated Danske Bank, OP Corporate Bank & SEB as Joint Bookrunners to arrange a series of fixed income investor meetings, commencing 15 September. Danske Bank is coordinating logistics. An expected €300m, Long 6yr, fixed-rate, senior secured RegS Green transaction will follow, subject to market conditions.
• 15th September: Gas Networks Ireland (exp. Issue ratings of A1 / A+ by Moody’s & S&P) mandated Barclays, BNP Paribas, Danske Bank, NatWest, Goodbody & J&E Davy as Active Bookrunners to arrange a series of fixed income investor calls on the 15th of September. A RegS, Registered, Senior, Unsecured, 6yr, €300m (wng) offering is expected to follow, subject to market conditions.

• 11th September: The State of Baden-Wuerttemberg (rated Aaa / AA+ / AAA by Moodys, S&P & Scope) mandated Deutsche Bank & DZ Bank as Joint ESG Structuring Coordinators & BNP Paribas, Crédit Agricole CIB, Deutsche Bank, DZ Bank, LBBW & Nordea as Joint Lead Managers for its upcoming inaugural €600m (wng), 10yr, European Green Bond ‘EuGB’ LSA format. The transaction will be launched in the near future, subject to market conditions. The target market for the bonds are retail, professional & eligible counterparties, each as defined in MiFID II & UK MiFIR product governance (all channels for distribution of the Bonds are appropriate).
• 11th September: The German Federal State of Mecklenburg-Western Pomerania (Land Mecklenburg-Vorpommern) (rated AAA by Fitch), mandated JP Morgan, LBBW, Nordea, NordLB & UniCredit to lead manage its upcoming 6yr, €500m (wng) Landesschatzanweisung. Launch is expected in the near future, subject to market conditions.

Swiss Franc (Chf)

• 11th September: BMW International Investment B.V. (exp. Issue rating of A2 by Moody’s), guaranteed by Bayerische Motoren Werke Aktiengesellschaft, mandated BNP Paribas & Deutsche Bank AG as Joint Bookrunners for a Chf benchmark offering. A dual-tranche transaction comprising expected tenors of 5.25yrs & 10yrs will be launched in the near future, subject to market conditions.

Recent Supply

Key Market Data