Monday, 24 September 2018

SSA Wrap: AFD looks to dollars, KA offers something different

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Agence Francaise de Developpement is set to bring some action to the US dollar SSA market on Tuesday, having mandated BNP Paribas, Goldman Sachs and JP Morgan for a new trade.

The French agency is planning a US$500m no-grow long three-year, with initial price thoughts set at 17bp area over mid-swaps. The issuer is following country peer Cades, which raised US$3bn of July 2020 financing on the back of a US$3.4bn book last week.

AFD was last in the market in January, when it printed a US$1bn five-year at 18bp over mid-swaps. That deal was bid 2bp wider on Monday, according to Tradeweb.

The new trade will fit in between two older US$1bn issues, one maturing in 2017 and the other in 2019, which were bid at plus 8.9bp and 12bp, respectively.

The transaction comes against a quieter market backdrop for SSA borrowers despite a good week last week. Funding officials at a lot of issuers will be away over the next few weeks and expectations are that this will take its toll on supply.

However, some opportunistic trades in sterling could surface following the success of KfW’s five-year Green bond last week, while the euro market is also looking open, again following a KfW transaction, a €1bn 20-year.

“If KfW can do a 20-year, then you can argue that the market is the best it’s been for a while, certainly since QE started,” one syndicate banker said. “A sensibly priced five-year for EIB should be enough to get an EARN off the ground.”

Away from AFD, KA Finanz is the only other issuer in the market, although it is more of a cross between a financial and an SSA borrower.

Leads Barclays, Deutsche Bank, Erste, Natixis and RBI set IPTs on a new five-year for the government-guaranteed Austrian bad bank at 35bp area over the Austrian government curve. The transaction is expected to be rated AA+, stable, by both S&P and Fitch.

The premium is bigger than what Caisse Centrale du Credit Immobilier de France paid last week for a five-year benchmark. The borrower priced a 800m trade at 17bp over interpolated OATs.

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