US dollar SSA business picks up
Five SSAs mandated US dollar bonds on Monday as issuers capitalised on the relatively attractive cost of funding and still functional market conditions in the currency, according to bankers.
The dollar market has largely been overshadowed by euros in terms of SSA volumes since April 2, when US president Donald Trump made the first of a series of back-and-forth announcements on tariffs.
But issuers are seeing this week as a good opportunity to return to the currency.
"It's still busy despite the volatility," said one senior SSA banker. "This is a buy week, but it's a shortened one," said another, referring to public holidays in Asia and Europe. "There's a long list of dollar trades."
The second banker said the cost of funding in dollars versus other major currencies was behind the flurry of supply, along with the constructive conditions.
Issuers bound for the dollar market are entering it at an interesting moment for SSA-Treasury spreads. Bonds from the best-followed SSAs are historically tight on that metric in secondary trading. Two weeks ago, market favourite the European Investment Bank even breached the Treasury curve, albeit briefly, according to LSEG data.
In the primary market, however, issuers are still mostly starting their deals at least around 10bp back of Treasuries, though some have gone tighter and still cleared debt in the last two months.
The African Development Bank has mandated Bank of America, BNP Paribas, JP Morgan, Nomura and Wells Fargo for a dual-tranche dollar deal consisting of a benchmark-sized three-year and a US$1bn no-grow 10-year. They are marketing the three-year at initial price thoughts of 35bp area over SOFR mid-swaps, or around 9bp over Treasuries, while IPTs for the 10-year are at SOFR mid-swaps plus 65bp area, equating to around 12bp over Treasuries.
Inter-American Development Bank mandated BMO, NBC and Scotiabank to place a US$500m March 2030 floating rate note. They set the spread at 40bp over SOFR mid-swaps.
Canada Pension Plan Investment Board appointed BNP Paribas, Bank of America, JP Morgan and TD Securities to run a five-year trade, which they are marketing at 57bp area over SOFR mid-swaps, or a Treasury spread of around 22.7bp.
A second Canadian issuer, Ontario, mandated a 10-year dollar deal. Barclays, BMO, CIBC and Scotiabank are marketing it at 98bp area over SOFR mid-swaps – around 45bp over Treasuries.
And Swedish local government funder Kommuninvest mandated Barclays, Bank of America, Danske Bank and TD Securities to place a November 2028 with IPTs at 43bp area over SOFR mid-swaps, or around 16.1bp over Treasuries.
Another local government funder decided to stick with euros. Finland's Municipality Finance mandated Danske Bank, DZ Bank, JP Morgan and SEB to place a seven-year green bond.
Madrid joined MuniFin in the single currency with its inaugural European Green Bond (EuGB). The Spanish capital mandated BBVA, CaixaBank, Credit Agricole, ING and Santander for the no-grow €500m five-year. ING is the green bond structuring adviser.
And the International Development Association is headed into the long end with a euro-denominated 20-year via Bank of America, Deutsche Bank, DZ Bank and JP Morgan.
The second banker said there is potential for a sovereign deal, too. Portugal and Italy are among the likely suspects to appear in the coming weeks, Commerzbank rates strategist Hauke Siemssen wrote in a note sent on Monday morning.
Sterling is set to see SSA supply, too, after the International Finance Facility for Immunisation mandated Barclays, NatWest and TD Securities to place a February 2028 in the currency. They began marketing the deal at IPTs of 52bp over Sonia mid-swaps, around 52.1bp over the 0.125% January 2028 Gilt.