• Market sentiment improved significantly yesterday afternoon with a strong rally across European Government Bonds, particularly OAT’s which saw yields retrace by c.10bps out to 10yrs.
• Oil had pushed comfortably through $100 yesterday, though we are once again back up this morning with heightened Iranian attacks on shipping overnight (see below).
  • After the close yesterday the Energy Information Administration (EIA) revised upwards its Q4 forecasts for Brent prices, projecting an avg. of $105 per barrel.
• We wait to see whether positive sentiment holds, with European credit indices tightening sharply into the close.
• We have a robust pipeline ahead of today’s open - note that the £ mandate is for 2027.
  • Corporate blackout period continues.
• € IG priced €6.5bn from 5 deals (1 x Corp, 3 x FIG & 1 x SSA) & via 7 tranches.
  • Air Liquide Finance’s 5 & 10yr fixed rate tranches yesterday had solid covers of 6.87 x & 7.06 x; with IPT to Pricing of 38 & 40bps respectively.
• In European IG only € primary was active with no supply in Sterling (£), Swiss Franc & US$ Reg S.
• Brent Crude pushed back through $100 on the back of increased Iranian attacks on takers in the Strait of Hormuz, currently trading at c.$101.32 (c.$100.78 this time yesterday). 
• The VIX tightened on a more positive sentiment yesterday afternoon & sits at a pre-open level of 15.01 (15.52 this point yesterday).
• iTraxx Europe & iTraxx Senior & Sub financial indices staged a significant tightening yesterday afternoon, set to open at 61.436 (-4.51%), 68.449 (-4.55%) & 112.692 (-5.86%) respectively (% △ from this point yesterday).
• Pipeline:  The European IG pipeline is as follows. 
  • 2 x € Corp (1 x dual-tranche debut)
  • 2 x € FIG (2 x Covered)
  • 3 x € SSA
  • 1 x £ SSA

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

Key € IG Supply Stats for yesterday

• Corporate
  • Total IG: €2bn
  • Avg. tranche size €667m
  • Avg. IPT to Pricing -34.17
  • Avg. cover 5.73 X
• FIG
  • Total IG: €3.25bn
  • Avg. tranche size €1.083bn
  • Avg. IPT to Pricing -4.5 (covered) €2.25bn 
  • Avg. IPT to Pricing -35 (unsecured)  €1bn
  • Avg. cover 2.19 X
• SSA
  • Total IG: €1.25bn
  • Avg. tranche size €1.25bn
  • Avg. IPT to Pricing -2
  • Avg. cover 2.0 X

Geo-Political News

• Iranian Strikes on Tankers in the Strait of Hormuz Iranian maritime forces have executed 9 attacks against commercial oil tankers passing through the Strait of Hormuz over the past 6 days. The aggressive manoeuvres targeted major commercial vessels, including crude carriers operated by international shipping fleets. The intensified attacks have caused global shipping insurance premiums to skyrocket, prompting several major commercial fleets to suspend transit or re-route vessels around the Cape of Good Hope. With physical volume flows through the Persian Gulf threatened, Brent crude prices surged back above the $100 per barrel threshold. International naval coalitions operating in the region have raised defence readiness levels.
• Houthi Forces in Yemen Strike Saudi Airports Iranian backed Houthi rebels launched coordinated missile & drone strikes targeting southern Saudi Arabian civilian aviation facilities, specifically striking King Abdullah bin Abdulaziz International Airport in Jazan & Najran International Airport. The cross-border aerial bombardment inflicted structural damage on passenger terminals & operational infrastructure, injuring 3 personnel & forcing civil aviation authorities to temporarily suspend regional flights. The attacks coincided with broader Houthi claims of targeting military sites in Riyadh & oil refineries in Rabigh. Saudi coalition defence systems intercepted multiple incoming projectiles, but the breached security perimeters prompted Riyadh to condemn the deliberate targeting of economic infrastructure. The military escalation follows heavy frontline clashes in Yemen's coastal regions, where coalition-backed government forces recently recaptured territory near the Bab el-Mandeb Strait.
• Reserve Bank of India Hikes Rates As expected the Reserve Bank of India raised its benchmark rate by 25bps to 5.5% during its scheduled Monetary Policy Committee assembly, marking the central bank's first rate increase in over 3 years. Monetary authorities adopted a formal policy stance of calibrated tightening to curb persistent domestic price pressures after headline CPI climbed to an 8-month high. The policy decision reflects growing central bank anxiety regarding elevated food & energy supply shocks threatening broader macroeconomic stability. Governor Sanjay Malhotra signalled that near-term rate reductions remain entirely off the table, prioritizing price stabilization over short-term growth expansion. Bond yields across Indian sovereign debt markets rose following the announcement, while equity markets registered modest declines as higher borrowing costs weighed on corporate valuations across retail & financial sectors.   
• Black Sea Drone Attacks Sink Commercial Grain Vessel Russian drones struck & sank the Turkish-owned cargo ship Royad Mammadov in international Black Sea waters, killing two crew members as the vessel transported Ukrainian corn toward European ports. The deliberate drone strikes off the Bulgarian coast represents a sharp escalation in attacks on civilian maritime navigation outside active combat zones. Ukrainian President Zelenskyy & Turkish maritime officials condemned the incident as a direct violation of international law, urging global pressure to secure commercial shipping corridors. The attack has triggered urgent security consultations among Black Sea states & NATO members regarding naval protection measures.   
• Russian Aerial Bombardment Strikeforce Hits Kharkiv Russian military forces launched a heavy barrage of guided aerial bombs into densely populated residential quarters of Kharkiv, killing at least 7 civilians & injuring 80 others. Local municipal authorities reported extensive destruction to municipal power networks, residential apartment blocks, & civilian municipal infrastructure. Ukrainian emergency teams conducted search & rescue operations beneath collapsed structures while regional defence units attempted to intercept incoming glide munitions. Ukrainian President Zelenskyy reiterated urgent requests to Western allies for additional long-range air defence batteries to protect urban population centres. The bombardment coincides with intensified Ukrainian counter-drone operations targeting military logistics hubs inside Russian border territories, reflecting an expanding geographic footprint of high-intensity long-range standoff strikes along the eastern front.   
• Lithuania Moves to Amend Constitutional Nuclear Protections The Lithuanian Seimas passed a preliminary legislative measure to remove the constitutional prohibition against hosting weapons of mass destruction, marking a major shift in Baltic defence strategy. Parliamentarians cited escalating hybrid security threats, regional sabotage operations, & border tensions with Russia as the primary rationale for revising state defence statutes. Prime Minister Mindaugas Sinkevičius called on NATO leadership to establish a comprehensive framework to counter hostile asymmetric operations targeting eastern European sovereign territory. The constitutional amendment requires additional parliamentary votes before formal ratification, but the initial approval underscores growing determination among frontline Baltic states to deepen military integration with Western allies.

Markets

• US Equity markets closed higher again as investor sentiment recovered, supported by resilient economic indicators & gains across megacap tech stocks. The Dow rose +0.49% to finish at 51,521, while the benchmark S&P gained +0.58% to end at 7,819. Broader risk appetite extended into the tech sector, lifting the Nasdaq up +0.45% to close at 27,600. Strong corporate earnings & steady economic momentum offset broader geopolitical concerns, maintaining positive market breadth across major industrial & growth sectors throughout the trading session.
• Asian Equity bourses trade lower amid elevated geopolitical concerns in the Middle East & surging energy prices yet again. The Nikkei trades down -0.77% at 70,137 as industrial exporters face profit-taking pressure. The Hang Seng is down -0.53% to stand at 24,152, dragged down by mainland real estate & tech counters. Meanwhile, the Kospi is down -1.23% to 6,856 as heavy semiconductor selling weighs on broad market sentiment.
• European & UK Equity futures indicate a mixed opening across major bourses as investors assess geopolitical developments & rising oil prices. FTSE futures decline -0.21% to indicate an opening level near 8,512, pressured by broader macro headwinds. DAX futures drop -0.53% toward 19,420, reflecting softness in industrial & automotive sectors. Conversely, CAC 40 futures gain +0.39% to point toward an opening level near 7,580, supported by relative resilience in consumer luxury names.
• UK & Eurozone Bond Markets UK Gilts & Eurozone Sovereign debt markets face a repricing tone as 10yr Gilt yields trade at 5.421% & 10yr Bund yields stand at 3.491%. The sovereign curve posture reflects persistent inflation risk premiums & global energy supply disruptions stemming from ongoing Red Sea & Persian Gulf shipping choke points. OAT’s staged a notable rally yesterday in the wake of recent heavy selling. Yield levels remain high, driven by firm inflation expectations & lingering geopolitical uncertainty in energy markets. With no scheduled central bank speakers or government bond auctions on today's calendar, fixed-income price action remains anchored by fundamental supply-demand dynamics & baseline macroeconomic expectations.
• Currency Snapshot:
  • Sterling trades at 1.325 against the US dollar (-0.18%), reflecting modest downside pressure amid broader greenback strength. Relative monetary policy expectations keep the currency within recent trading ranges.
  • Euro stands at 1.123 against the US dollar (-0.12%) & trades at 0.848 against Sterling (+0.05%), maintaining a stable footing amid steady sovereign yield differentials across the region.
  • Swiss Franc trades at 0.833 against the US dollar (+0.22%), while the EUR/CHF cross stands at 0.936 (-0.10%), with the Franc benefiting from safe-haven capital flows.

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:
  • USA - 12th October (Columbus Day / Indigenous Peoples' Day).
  • Spain - 12th October (National Day of Spain)
  • Eurozone - 1st November (All Saints Day) - Sunday
  • USA - 11th November (Veterans Day)

Pending Deals & Mandates

Euro (€)

• 29th September: AusNet Services Holdings Pty Limited (exp. Issue ratings of Baa1 / BBB+ by Moody’s & S&P), mandated Barclays, BNP Paribas, Goldman Sachs International & HSBC to arrange a series of fixed income investor meetings commencing Wednesday the 30th September. A € benchmark 10.5yr, Reg S senior unsecured transaction may follow, subject to market conditions. AusNet is an Australian diversified energy infrastructure business that owns & operates the primary regulated Victorian electricity transmission network, as well as an electricity distribution network in eastern Victoria & a gas distribution network in western Victoria.
• 5th October: DFMG Holding GmbH (exp. Issue ratings of BBB- / BBB by Fitch & Kroll), the leading tower infrastructure operator in Germany & Austria, mandated BNP Paribas, BBVA & Crédit Agricole CIB as Joint Active Bookrunners to arrange a series of fixed income investor calls on Monday 5th & Tuesday 6th October. BNP Paribas is coordinating logistics. A debut € benchmark Reg S, bearer, fixed-rate, senior secured dual-tranche bond offering, consisting of long 4yr & 7yr, will follow, subject to market conditions.

• 21st September: Fairstone Bank of Canada (exp. Issue ratings of Aa1 / AA by Moody’s & DBRS), mandated RBC Capital Markets as Arranger & Sole Structuring Advisor, & BMO Capital Markets, DZ Bank, LBBW, Natixis & RBC Capital Markets as Joint Active Bookrunners for an inaugural 3yr € benchmark soft-bullet Covered Bond. The Covered Bonds are backed by Canadian residential mortgages. This is the borrower's debut covered bond.
• 30th September: Equitable Bank (exp. Issue rating of Aa1 / AA+ by Moody’s & Fitch), mandated Barclays, Commerzbank, DZ Bank AG, Erste Group, LBBW, Scotiabank & TD Securities as Joint Lead Managers to manage its forthcoming €500m (wng) Dec 2029, RegS registered Covered bond transaction. The issue will be launched in the near future, subject to market conditions.

• 1st October: The Federal State of Saxony-Anhalt (rated Aa1 by Moody’s & Fitch), mandated BayernLB, CACIB, DZ Bank, ING, JP Morgan, NatWest & NordLB  to lead manage its upcoming €500m (wng) inaugural Green, fixed rate Landesschatzanweisung with a medium term maturity. DZ Bank & NatWest are Joint Sustainability Coordinators The deal will be launched in the near future subject to market conditions.
• 6th October: The City of Dortmund, mandated DekaBank & UniCredit to lead manage its upcoming €150m (min) 7yr Stadtanleihe. The issue will be 0% risk weighted, LCR Level !.  The deal will be launched in the near future subject to market conditions.

Sterling (£)

• 6th October: His Majesty’s Treasury (HMT) of United Kingdom has mandated Barclays, HSBC, Lloyds, Morgan Stanley, NatWest & RBC for its Digital Gilt Instrument (DIGIT) pilot issuance following a competitive procurement process. The transaction is expected to take place by Q1 2027. This follows the appointment of HSBC as the Distributed Ledger Technology (DLT) supplier in February, & the announcement in July that HSBC & LSEG have signed a memorandum of understanding to deliver a bilateral Digital Securities Deposit link.  

Recent Supply

Key Market Data