Adds lead manager comments; corrects inflation-linked auction
European sovereigns are again converging on the euro primary market with EU heavyweight France at the fore of a new wave of financing for national coronavirus responses getting under way.
France has mandated banks for its first syndicated offering since hiking its 2020 funding requirement. An all-European quintet of Barclays, BNP Paribas, Deutsche Bank, NatWest and Societe Generale will lead manage the new May 2040 offering.
In addition, both Estonia and Iceland have announced new benchmarks in the single currency. The former's deal, which is set for launch next week, would mark its first international bond in nearly two decades.
Meanwhile, Denmark has upped its financing requirement and expected bond volume for the year. Although not in the eurozone, the country's krone is a euro proxy.
The Triple A sovereign also said that it may return to issuing in foreign currencies after an absence of six years.
GOING UP
As reported, Agence France Tresor (AFT) was assigned a €309.1bn short and long-term financing requirement net of buybacks as part of the Ministry of Economy and Finance's second revised budget for 2020 published a month ago - up from €215bn in the initial budget.
AFT had said that it 'will examine in the following weeks with its primary dealers the best way to implement this updated financing programme'. The new 20-year was confirmed at the start of last week.
The deal will mark France's first post-crisis syndication and it has opted for a longer tenor, unlike other sovereigns such as Spain, Austria, Ireland and Belgium that have focused on shorter terms.
It has received "some good indications so far" ahead of price guidance, according to a lead manager.
Pricing is complicated by high coupon older issues and France's 2039 green bond being the nearest in maturity. But a spread of 3bp-4bp over an interpolation of the sovereign's 2039s, 2045s and 2048s will help guide fair value, the lead said.
Premiums have declined since the peak of the crisis. France is more likely to be in the zero territory concession of Germany's recent 15-year debut conventional Bund syndication, rather than the double-digit figures offered by Italy and Spain last month, the lead anticipated.
The issuer was last in the market in January with a €5bn 2052 OAT, which set a new record-yield low of 0.727%, that saw the order book shed as much as €10bn of demand after its spread was tightened by 3bp.
AFT's 2020 programme is also due to feature a new 10-year OAT and two new inflation-linkers. These comprise a new 10 to 15-year OAT indexed to the French consumer price index (OATi) and a new 5-year OAT indexed to the euro area consumer price index (OAT€i).
AFT has said that the euro inflation-linker will be auctioned, but has not specified the distribution approach for the other two deals. Its original December 2019 announcement said that the new 10-year would be auctioned, but its most recent release spoke only of the bond being "issued".
It has also added an extra auction in August.
In addition, AFT has said that it "will also continue to tap the green bond first issued in January 2017 to meet market demand, up to the limit of eligible green expenditures for 2020".
NORDIC/BALTIC FLAVOUR
Other sovereign activity in the currency has a strong Nordic/Baltic flavour. Iceland has mandated Citi, JP Morgan and Morgan Stanley to lead a six-year after one-on-one fixed-income investor calls from today, with the Single-A deal to follow.
In addition, Estonia is preparing a 10-year benchmark. The split-rated (A1/AA-/AA-) eurozone member, whose government debt is a notably low 9.2% of GDP, is seeking up to €1bn, according to earlier report.
Citi, Nordea and Societe Generale are lead managers. The deal will follow one-on-one calls and a global investor call next Tuesday, June 2.