• European Government Bonds rallied across the board, with Gilt & OAT yields down by c.3 to 5bps across the curve.
  • On the week - since Mondays Open - 2 to 10yr…
    • ..Bund yields are 4.3 to 2bp wider
    • ..OAT yields are 11 to 2bps tighter
    • ..Gilt yields are 7.5 to 9bps wider
• The European Union will likely be the focus of next week (possible 15yr & 7yr; TAP or otherwise). Expect a combined €9 to €12bn.
• The week will be punctuated with corporate blackouts, with participants anticipating another choppy & volatile market.
• Some syndicate desks are less concerned about the Monday holiday in Spain & Memorial Day affecting supply (see Talking Point).
• Many borrowers are ‘monitoring’ the markets.
• Some desks cite that threats remain that Iran may seek to take advantage of Trump's ‘passive’ stance ahead of the mid-terms.
• € IG supply week-to-date ended up delivering almost exactly the forecasted volume of €13.75bn.
  • 101.8% of Supply Survey Forecasts of €13.51bn.
• Books on the Pepsi trade today were not released as it is an SEC Registered trade.
• € IG delivered only €1bn from 1 deal (1 x Corp) via 2 tranches.
• There was no supply in either the Sterling (£), Swiss Franc or US$ Reg S markets.
• Today’s “Talking Point” (below) looks at € IG issuance on ‘Columbus Day’ over the past 5 years.
• iTraxx Europe & the iTraxx Senior & Sub financial indices having been highly volatile throughout the week & heading into the close around 2% to 3% tighter on the week, which may surprise some. As we stand now today they are tighter, currently at 63.225 (-1.53%), 70.614 (-1.33%) & 117.229 (-1.78%) respectively (as we print & % △ on the day).
• Vix Index fell slightly, now at 15.05 (15.41 this morning).
• Brent Crude continued its slow upward trend, currently at c.$103.95 (c.$102.86 this morning).
• European equity bourses were all in the green with the FTSE, the Dax & CAC 40 up by +1.12%, +1.23%, & +1.06% respectively.
• A breakdown of today’s primary € IG supply is as follows.

• Corporate
  • Total IG: €1bn
  • Avg. tranche size €500m
  • Avg. IPT to Pricing -29.5 
  • Avg. cover  NA (Books not revealed as SEC Registered)
• FIG
  • Total IG: €0
  • Avg. tranche size €0
  • Avg. IPT to Pricing (covered) NA
  • Avg. IPT to Pricing (unsecured)  NA
  • Avg. cover NA
• SSA
  • Total IG: €0
  • Avg. tranche size €0
  • Avg. IPT to Pricing NA
  • Avg. cover NA

• Pipeline:  The European IG pipeline is as follows. 
  • 1 x € Corp (Scheduled for Monday)
  • 1 x € FIG (1 x Covered)
  • 3 x € SSA (1 x Green & 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 €12bn.

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

Supply Survey Results For Next Week

• Thank you to all who participated in our ‘Weekly Supply Survey’. Forecasts indicate €25.5bn of primary IG supply, broken down as follows.

Talking Point

• With Columbus Day on Monday, it's worth examining what supply in the € IG market has looked like on the day, looking back the last 5yrs.
• Corporates have been absent every year without exception.
• No obvious trends are apparent for FIG & SSA.
• 2023 was a zero print year.
• Overall volumes, while modest, have drifted higher the last 2yrs. Following the 2023 shutout, supply rebounded to €1bn in 2022, €3bn in 2025, & a 5yr high of €3.3bn in 2024, a pattern that hints at FIG issuers growing more comfortable using the day, possibly drawn in by thinner competition & a European investor base that isn't sidelined by the US holiday - though we have a holiday in Spain this Monday.
• This year's window opens against what's widely expected to be a tough week, following heavy market volatility & credit spreads near multi-month wides.
• Going by the 5yr track record, a modest FIG &/or SSA print somewhere in the €1 to 3bn range looks like the base case, though another clean washout, as in 2023, remains entirely plausible given current conditions. Though do remember the massive EU trade is scheduled for next week.

Euro IG (today)

• PepsiCo, Inc. (exp. Issue ratings of A1 / A+ by Moody’s & S&P) brought a €1bn (wng) dual-tranche, senior unsecured, SEC Registered offering. A €500m (wng) 3yr fixed carried IPTs in the area of MS+60, while a €500m (wng) 9yr had IPTs in the area of MS+105. Guidance for the 3yr came in the area of MS+35 (+/-2bps) WPIR, & for the 9yr, in the area of MS+75 (+/-2bps) WPIR. The deal launched for €500m each at MS+33 & MS+73 respectively. Books were not revealed.
  • Back on the 4th of February, PepsiCo brought a (non-M&A related) €2.5bn, 4 tranche trade. A €500m 2yr FRN priced at 3mth €+23 (-24.5bps tighter than IPTs from a book of €1.1bn). A €650m 8yr priced at MS+55 (32.5bps tighter than IPTs from a book of €1.3bn). An €850m 12yr priced at MS+73 (34.5bps tighter than IPTs from a book of €2.4bn). Finally a €500m 21yr priced at MS+100 (32.5bps tighter than IPTs with a €2.1bn book). Prior to that in 2025 they priced a €1bn dual-tranche (12 & 30yr) in July, & a £750m dual tranche (7 & 12yr), also in July. 

Week-to-date volumes:

Year-to-date volumes:

Sterling IG (today)

• No issues

Week-to-date volumes:

Year-to-date volumes:

Swiss Franc IG (today)

• No issues

Week-to-date volumes:

US$ Reg S (today)

• No issues

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.

• 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 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.
  • A digitally native securities is a bond, issued, & managed directly on a blockchain or distributed ledger from inception, rather than existing first as a physical certificate & then tokenized latterly. By incorporating smart contracts into their core design, such bonds automate dividend distributions, compliance checks, & settlement, offering near-instant clearing, enhanced transparency, & continuous 24/7 trading without relying on legacy clearinghouses or paper registries.

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.  

Transaction Details

PRICED: PepsiCo, Inc. €1bn 3yr & 9yr Sr Unsec; MS+33 & MS+73

IGC European Market: Deal Flow - General

Reoffer: 3yr: MS+33bp / 99.953 / 3.767% 9yr: MS+73bp / 99.824 / 4.274%
Benchmark: 3yr: DBR 0 15-Aug-29 / HR 110% 9yr: DBR 2.6 15-Aug-35 / HR 101%

Allocations in the system
Launched:
3yr: €500m @ MS+33bp
9yr: €500m @ MS+73bp
Guidance: 3yr: MS+35a (+/-2bp) WPIR 9yr: MS+75a (+/-2bp) WPIR
IPTs: 3yr: MS+60a 9yr: MS+105a

• Issuer: PepsiCo, Inc. (Ticker: PEP; Country: US)
• LEI: FJSUNZKFNQ5YPJ5OT455
• Issuer Ratings: A1 (Stable) by Moody's / A+ (Stable) by S&P
• Expected Issue Ratings: A1 (Stable) by Moody's / A+ (Stable) by S&P
• Format: Senior Unsecured Notes; SEC Registered
• Settlement: 16-Oct-26 (T+4)
• Tranche:
  • 3yr: 3-year Fixed
  • 9yr: 9-year Fixed
• Issue Size:
  • 3yr: €500m
  • 9yr: €500m
• Maturity Date:
  • 3yr: 16-Oct-29
  • 9yr: 16-Oct-35
• Coupon:
  • 3yr: 3.75% Fixed, Annual, ACT/ACT (ICMA)
  • 9yr: 4.25% Fixed, Annual, ACT/ACT (ICMA)
• Reoffer:
  • 3yr: MS+33bp / 99.953 / 3.767%
  • 9yr: MS+73bp / 99.824 / 4.274%
• Use of Proceeds: General Corporate Purposes
• Benchmark:
  • 3yr: DBR 0 15-Aug-29 / HR 110%
  • 9yr: DBR 2.6 15-Aug-35 / HR 101%
• Benchmark ISIN:
  • 3yr: DE0001102473
  • 9yr: DE000BU2Z056
• Listing and Documentation: The Company intends to apply to list the Underwritten Securities on the Nasdaq Bond Exchange and expects trading in the Underwritten Securities to begin within 30 days after the original issue date.
• Governing Law: NASDAQ Listing, New York Law
• Par Call:
  • 3yr: Yes, 1-month (16-Sep-29)
  • 9yr: Yes, 3-month (16-Jul-35)
• MWC:
  • 3yr: Yes
  • 9yr: Yes
• Clearing System: Clearstream, Euroclear
• Denominations: €100k x €1k
• ISIN:
  • 3yr: XS3541074905
  • 9yr: XS3541075381
• Active Bookrunners: Deutsche Bank (B&D), HSBC
• Target Market: Manufacturer target market (MiFID II and UK MiFIR product governance) is eligible counterparties and professional clients only (all distribution channels). No PRIIPs key information document (KID)/CCI Product Summary has been prepared as not available to retail in EEA or the UK.
• Timing: Books closed
• Hedges Deadline: 14.40 UKT

• To view the LIVE / REAL TIME European IG pipeline please click here.
• Details correct at time of posting