• While the market was technically open & receptive, pending Central Bank announcements sidelined issuers
• There was no primary supply in € IG space unsurprising after yesterday’s difficult environment
  • Credit indices broadly tighter, with oil trading in a tight range
  • Sentiment not the reason for a largely blank day
  • Geopolitical news is not improving, yet no real news of it worsening. Slight limbo phase
• UK Chancellor Healey delivered his first budget, increasing the surcharge on tax on UK Bank profits from 3.0% to 6.0% - effective from January 2027 through to March 2028.
  • Bank stocks rallied as expectations had been for harsher 
• UK & European govies posted minor losses in the morning, not conducive for new issues. Conversely, the afternoon session has seen Bunds, OATs & Gilts all rally
  • Recent new issues launched this week have seen selling pressure in the secondary market 
• Fed today
  • FOMC - Rate announcement @ 6:00pm GMT 
    • ‘Hold’ expected with Hawkish tone (9.4% probability of rate hike)
• P&G books disclosed this morning for yesterday’s multi-tranche Reverse Yankee.
  • Disclosure delays common for SEC Registered trades
  • Covers were solid:
    • 4yr >€1.8bn = 2.4 X
    • 8yr >€2.1bn = 2.1 X
    • 12yr >€1.7bn = 2.27 X
    • 20yr >€2.5bn = 3.33 X
• Bunds rallied in long end with the curve flattening by c.5.5bps as short end yields pushed higher
• OAT’s rallied across the curve from 3yrs & out with the curve flattening by c.5bp
  • OAT vs Bund 10yr spread came in c.2.7bps from yesterday, currently trading at +153.1
• Gilts rallied with the curve flattening by c.3.5bp
• € swap curve flattened by c.3.7bps
  • € swap spreads were wider by c.1bp 7yrs & in
• £ swap curve flattened by c.3bps
  • £ swap spreads tighter by c.1bp
• Today was a zero print session for € IG, Sterling (£) & US$ Reg S
  • €16.55bn WTD or 85.4% of our ‘Supply Survey’ forecast of €19.38bn
  • Rare to have no € IG supply on a Wednesday. YTD only 3 Wednesdays had zero trades (29th Jul, 5th Aug & today).
  • Wednesday’s typically busiest day for € IG, avg. €10.9bn from 10+ deals
  • Sterling issuance likely for tomorrow & Friday if UK Autumn Budget unfolds as expected
• Swiss Franc delivered Chf105m from 1 deal (1 x SSA) via 1 tranche
• Today’s “Talking Point” (below) looks at € IG Reverse Yankee supply YTD
• iTraxx 5yr Europe & the iTraxx Senior & Sub financial indices tightened for a third straight session currently trading at 64.184 (-1.00%), 72.699 (-1.19%) & 122.464 (-1.62%) respectively (as we print & % △ on the day).
• Vix Index was lower, currently at 17.22 (17.52 this morning)
• Brent Crude fell in the afternoon, currently at c.$115.60 (c.$115.82 this morning)
• European equity bourses were broadly higher with the FTSE up by -0.26% & the Dax & CAC 40 both up by +0.40% & +0.19% respectively
  • YTD: FTSE ↑7.88%, Dax ↑4.91% & CAC 40 ↓3.03%
• A breakdown of today’s primary € IG supply is as follows

• Corporate
  • Total IG: €0
  • Avg. tranche size €0
  • Avg. IPT to Pricing NA
  • Avg. cover NA
• FIG
  • Total IG: €0
  • Avg. tranche size €0
  • Avg. IPT to Pricing  (covered) €0
  • Avg. IPT to Pricing  (unsecured) €0
  • 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
  • 1 x € FIG (1 x Subordinated)

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

Talking Point

• Following P&G’s €3.25bn 4-tranche SEC Registered offering yesterday & Dover’s €800m 4yr on Monday, today we look at € IG Reverse Yankee supply YTD.
• US issuers remain a key pillar of € primary. Reverse Yankees have delivered €135.7bn YTD from 67 deals via 142 tranches, c.9.2% of total € IG volume (€1.47trn). 57 unique issuers have tapped the market, with 8 returning for a second or third visit.
• Supply has been front-loaded. H1 produced €85.1bn (62.7%) from 36 deals, with February (€23.05bn) & March (€22.5bn) the standout months. June (€5.7bn), April & August (€6.1bn each) were the quietest. The busiest single session was the 12th of February (€15.25bn), when Goldman Sachs, JPMorgan, Ford Credit, T-Mobile & WP Carey all priced.
• Deal sizes have come down since the summer. Jumbo mega-cap prints dominated H1, led by Amazon’s €14.5bn 8-tranche (11th March, 10.7% of YTD volume on its own) & Alphabet’s €9bn 6-tranche (5th May). The average deal size has since fallen from c.€2.36bn in H1 to c.€1.63bn, while September had the most deals of any month (13) at the smallest average size (c.€1.38bn).
• Financials dominate the mix with €43.73bn (32.2%) from 23 deals, ahead of Communication Services (€19.55bn) & Consumer Discretionary (€18.85bn). The US money-centre banks alone account for €28.65bn (21.1%), with Goldman Sachs the most frequent visitor (€13.4bn via 3 trips). Consumer Staples has the second-highest deal count (9).
• October is already at €13.75bn from 8 deals.

Euro IG (today)

• No issues.

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)

• Treasury Corporation of Victoria (exp. Issue ratings of Aa2 / AA / AA+ by Moody’s, S&P & Fitch) priced a Chf105m 25yr senior unsecured & unsubordinated trade at SARON MS+50.
  • This is their first print since their €2bn 15yr senior unsecured offering in September of last year, which priced at MS+82 (3bps tighter than guidance from a book of €17bn).

Week-to-date volumes:

US$ Reg S (today)

• No issues.

Pending Deals & Mandates

Euros (€)

• 28th October: APA Infrastructure Limited (rated Baa2 / BBB by Moody’s & S&P), guaranteed by APA Group Limited, mandated BNP Paribas, BofA Securities, HSBC & J.P. Morgan as Joint Lead Managers to arrange a series of fixed income investor meetings & calls commencing Monday, 2nd November. A Benchmark 10yr € RegS senior unsecured transaction may follow, subject to market conditions.

• 19th October: Sumitomo Life Insurance Company (exp. Issue ratings of A- / A- by S&P & Fitch) mandated JP Morgan, BofA Securities, Goldman Sachs, SMBC Nikko & BNP Paribas to arrange a series of fixed income investor conference calls commencing Monday the 19th October. JP Morgan will be coordinating logistics. A potential € benchmark, Reg S, Fixed to fixed, step-up 30NC10 callable subordinated bond offering will follow, subject to market conditions.

Transaction Details

PRICED: Treasury Corporation of Victoria CHF 105m 25yr Sr Unsec; SARON MS+50bp

IGC European Market: Deal Flow - SSA

Reoffer: 25yr: SARON MS+50bp / 100 / 1.2875%

• Issuer: Treasury Corporation of Victoria
• Ticker: TCV
• Guarantor: Government of Victoria pursuant to Section 32(1) of the Treasury Corporation of Victoria Act 1992 of the State of Victoria
• Guarantor Domicile: Australia
• Format: Public Fixed-Rate Notes
• Status: Senior, Unsecured, and Unsubordinated
• Guarantor Rating: Aa2 (stable) by Moody's, AA (stable) by S&P, AA+ (stable) by Fitch
• Instrument Rating (exp): Aa2 by Moody's, AA by S&P, AA+ by Fitch
• Issue Size (in mm): CHF 105mm
• Coupon: 1.2875% p.a.
• Maturity: 25 years (10-Nov-26 until 10-Nov-51)
• Issue Price: 100
• Spread/Yield: SARON MS +50.0 // YTM 1.2875% // Govt.+77
• ISIN / Security Number: CH1619474039 / 161947403
• Lead Manager(s): UBS
• SNB Repo-eligibility: At the discretion of the SNB, expected yes (HQLA: Level 1)
• Documentation: TCVs EMTN Programme dated 31-Jan-24
• FinSA Prospectus: Delayed prospectus approval in accordance with article 51(2) FinSA
• Governing Law: English law
• Covenants: PP, NP
• SIX Listing: 06-Nov-26
• Denomination: CHF 5000
• Sales Restrictions: In accordance with selling restrictions of TCVs EMTN Program

To view the LIVE / REAL TIME European IG pipeline please click here.

Details correct at time of posting