• Yesterday's volatility was profound, yet primary still produced 3 trades in € IG & 2 in £ IG.
• European Government Bonds were a rollercoaster yesterday with a strong sell-off in OAT’s holding throughout the session, with yields 7yrs & out rising by more than 10bps.
  • OAT Bund spread at 10yrs widened 12bps alone from this point yesterday (127 to 139).
• Primary has proved resilient & that deals can get done, with investors absorbing higher quality assets such as secured & SSA prints.
  • The Pipeline reflects this & supply today is likely to lean into that sentiment, despite the ‘risk-off’ back-drop.
• We have had material swings in European credit indices notably the iTraxx Europe, Senior & Sub. 
• € IG priced €1.5bn from 3 deals (1 x Corp, 1 x FIG & 1 x SSA) & via 3 tranches.
• Sterling (£) delivered £1bn from 2 deals (1 x FIG & 1 x SSA) & via 2 tranches.
• No supply in either Swiss Franc or US$ Reg S markets.
• Brent Crude yesterday again fell through $100 late in the day, staging a consistent rise since, currently trading at c.$102.70 (c.$101.32 this time yesterday). 
• The VIX traded as high as 16 yesterday falling back to close at 15.08 (15.01 this point yesterday).
• iTraxx Europe & iTraxx Senior & Sub financial indices pushed sharply wider, but closed off their highs, set to open at 63.594 (+3.51%), 71.128 (+3.91%) & 118.126 (+4.82%) respectively (% △ from this point yesterday).
• Pipeline:  The European IG pipeline is as follows. 
  • 2 x € Corp (1 x dual-tranche debut)
  • 1 x € FIG (1 x Covered)
  • 5 x € SSA (1 x Green, 1 x Sustainable, 1 x LSA, & 1 x Digital Native Security)
  • 1 x £ SSA (slated for Q1 2027 - will keep in pipeline for this week then remove)

• The European Union (RFP): Likely to launch their scheduled 15yr next week. May also bring a 7yr (TBC & possibly a TAP of their 10/33). Expect a combined €9 to €11bn.

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

Key € IG Supply Stats for yesterday

• Corporate
  • Total IG: €500m
  • Avg. tranche size €500m
  • Avg. IPT to Pricing 0
  • Avg. cover  NA
• FIG
  • Total IG: €500m
  • Avg. tranche size €500m
  • Avg. IPT to Pricing -4 (covered) €500m 
  • Avg. IPT to Pricing (unsecured)  €0
  • Avg. cover 2.4 X
• SSA
  • Total IG: €500m
  • Avg. tranche size €500m
  • Avg. IPT to Pricing 0
  • Avg. cover 0.79 X

Geo-Political News

• US Demands Iran Reduce Nuclear Enrichment Capacity Washington has intensified diplomatic & security pressure on Tehran, demanding a meaningful reduction in domestic nuclear enrichment capabilities as a strict prerequisite for resolving the war. Officials in Washington stated that Iranian concessions on uranium processing remain critical to securing a broader diplomatic framework. In response, leadership in Tehran maintained that its operational governance & decision-making structures remain fully intact. Senior lawmakers in Washington have simultaneously raised sharp concerns over limited oversight & access to vital regional staging facilities, including Al Udeid Air Base in Qatar, amidst heightening military deployment. Strategic analysts highlight that without verified compliance on enrichment thresholds, broader efforts to de-escalate regional hostilities & secure transit through the Strait of Hormuz will face severe impediments.   
• Iran Targeted Commercial Tanker Off Qatar Yesterday evening a commercial oil tanker sustained physical damage after being struck off the northern coast of Qatar. Concurrently, naval drone strikes targeting energy infrastructure caused major fires near Russian facilities on the Black Sea coast. The incidents underscore escalating threats to critical shipping routes across both Europe & the Middle East. The incident occurred in international waters 51 nautical miles (94 km) north of Madinat ash Shamal, Qatar, within the Persian Gulf. The assumption is the attack was launched by Iran. 
• Russia Launches Extensive Missile Strikes Across Ukraine Russian military forces executed a coordinated, large-scale strike against strategic targets across Ukraine, deploying over 130 unmanned aerial vehicles alongside 48 cruise & ballistic missiles. Ukrainian defence officials confirmed substantial civilian casualties & severe damage to critical national infrastructure following overnight bombardments. Officials in Kyiv strongly condemned the widespread destruction, urging Western allies to accelerate deliveries of advanced air defence systems & heavy munitions. International observers note that the renewed operational intensity highlights ongoing tactical friction along active battle lines, further complicating broader diplomatic stabilization efforts. The escalation continues to place severe strain on regional civilian grid systems & industrial infrastructure.   
• Houthi Forces Execute Strikes On Saudi Frontier Infrastructure Yesterday, Iran backed Houthi forces in Yemen launched targeted attacks against two regional airports in Saudi Arabia situated near the southern border, resulting in multiple casualties & structural damage to transport infrastructure. Saudi-backed ground forces engaged in intense tactical manoeuvring across key strategic heights within Yemen's Taiz governorate to counter hostile positions. The cross-border escalation underscores the volatile security environment spanning the southern Arabian Peninsula & adjacent maritime corridors. Regional defence postures remain on high alert as military commanders evaluate defensive deployments around key transport hubs & economic assets.
• EU Launches Direct Bilateral Trade Negotiations In Beijing Senior diplomatic delegations from the European Union officially opened high-level bilateral trade negotiations with Chinese counterparts in Beijing amidst mounting commercial pressures & reciprocal economic friction. European representatives aim to address persistent structural market imbalances, industrial subsidies, & trade barriers impacting key export sectors. Discussions occur against a backdrop of increasing supply chain scrutiny & regulatory shifts surrounding technology transfers & critical material dependencies. Officials from both jurisdictions face complex diplomatic balancing acts to avoid escalating economic protectionism while protecting core domestic industrial interests.
• UK Consulate Prepares Departure Amid Diplomatic Strain Diplomatic relations between London & Jerusalem reached a notable low point as the British diplomatic mission in East Jerusalem prepared for formal operational closure following a government directive. The forced closure comes amidst escalating friction regarding West Bank policies & targeted sanctions, prompting foreign ministry officials to evaluate potential retaliatory diplomatic measures. Local community leaders & international observers expressed strong concerns regarding reduced diplomatic representation & humanitarian monitoring capability across affected Palestinian territories.
• SpaceX In Talks for $40bn Bond Offering to Fund Nvidia Chips & Expansion Space Exploration Technologies Corp. announced potential plans to raise over $40bn via a bond offering, post IPO. UOP’s primarily to procure advanced Nvidia semiconductors & expanding AI compute data centre infrastructure. Equity markets reacted cautiously to the massive debt package, as outstanding shares traded down amidst investor concerns over long-term leverage & elevated interest expense burdens. Concurrently, derivative traders aggressively repriced risk across fixed-income instruments, pushing CDS to record highs. Analysts note that while debt financing avoids immediate equity dilution, aggressive capital expenditure strategies highlight the broader financial friction & escalating capital costs facing major tech firms building large-scale AI compute infrastructure.

Markets

• US Equity indexes drifted lower as investor profit-taking in mega-cap tech shares offset modest gains across defensive sectors. The Dow dropped 341 points to 51,180 (-0.66%), while the S&P shed 17 points to 7,802 (-0.22%). The Nasdaq closed down 61 points at 27,539 (-0.22%). Under the surface, selling pressure remained concentrated in high-beta software & semiconductor names, whereas consumer staples & utilities attracted defensive capital flows, insulating benchmark indexes from deeper session drawdowns.
• Asian Equity bourses are trading predominantly lower as rising global yields & commodity volatility weigh on regional sentiment. The Nikkei trades down 620 points to 69,416 (-0.88%), pressured by heavy selling across semiconductor exporters. The Hang Seng declines 167 points to 23,963 (-0.69%) as property sector drag persists, while the Kospi trades down 83 points to 6,721 (-1.21%) amidst broad tech weakness.
• European & UK Equity futures point to a subdued open following negative regional sentiment & global tech drag. FTSE futures trade down -0.02% at 8,250, indicating flat early trade, while DAX futures trade down -0.02% at 19,410. CAC 40 futures trade under heavy pressure at 7,480 (-1.27%), driven by downside revisions across luxury goods exporters & industrial sector majors.
• UK & Eurozone Bond Markets European sovereign bond yields rose substantially yesterday reflecting the ongoing macroeconomic repricing across European fixed-income markets. The 10yr Bund yield now stands at 3.473%, while the 10yr Gilt yield trades at 5.442%.
• Currency Snapshot:
  • Sterling trades at 1.321 against the US dollar (-0.15%), reflecting modest greenback demand & shifting interest rate differentials.
  • Euro trades at 1.121 against the US dollar (-0.10%), while printing at 0.848 against Sterling (+0.05%), bound by steady cross-currency flows.
  • Swiss Franc trades at 0.833 against the US dollar (+0.20%) & 0.933 against the Euro (-0.12%), supported by safe-haven capital positioning.

Economic Data (Western European Today)

Govt Bond Auctions (Western European Today)

• There are no bond auctions scheduled in Europe 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 as soon as Thursday 7th, subject to market conditions. Investor calls concluded Tuesday with c.70 investors engaged. Balance of feedback centred around MS+low-mid-100s (L-4yr) & MS+mid-high-100s (7yr).

• 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.

• 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 Stability 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 1. The deal will be launched in the near future subject to market conditions.
• 7th October: The International Development Association - IDA (rated Aaa / AAA by Moody’s & S&P), mandated  BNP Paribas, Deutsche Bank & DZ Bank as joint lead managers for a new 30yr, fixed rate, € benchmark Sustainable Development Bond (SEC exempt). The issue is expected to be launched & priced in the near future, subject to market conditions.
• 7th October: The Federal State of Lower-Saxony (rated AAA by Fitch), mandated Helaba, JP Morgan, LBBW, NordLB & UniCredit to lead manage its upcoming, 8yr (13th Oct 2034), € Benchmark LSA (Landesschatzanweisung). The transaction will be launched in the near future, subject to market conditions.
• 7th October: The Grand Duchy of Luxembourg (rated Aaa / AAA / AAA by Moody’s, S&P & Fitch), mandated Barclays, BCEE, BGL BNP Paribas, Citi & Credit Agricole CIB as Joint Lead Managers to arrange a series of virtual fixed-income investor calls in relation to its upcoming Inaugural 10yr, € benchmark fixed rate Digitally Native Securities. The Digitally Native Securities will be issued on a distributed ledger technology (DLT) platform operated by LuxCSD S.A. (D7 DLT Platform). The Digitally Native Securities are also eligible for clearance & settlement though Clearstream Banking & Euroclear Bank SA/NV. The transaction is expected to be launched & priced in the near future, subject to market conditions. RegS Bearer, CAC, FCA/ICMA stabilisation.

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