The European Financial Stability Facility has departed from its usual intraday Monday execution to follow a request for proposal last Wednesday, with its deal now likely in the coming days.
It is set to be one of the first major euro SSA transactions since July, with KfW and BNG also in the pipeline. Those three deals will set the stage for what is likely to be a typically hectic few weeks after the the summer period.
Two senior SSA bankers said they were surprised EFSF had chosen not to execute on Monday, though the decision was not an illogical one.
"We've been saying for a very long time to them, why do they always do these intraday trades?" said one of the bankers. "It's not a particularly busy market. It makes sense for them to do a two-day execution."
The second banker, an SSA head, said the longer timeline would allow more investors to return to their desks. He added that any trade would have been executed smoothly if it had priced on Monday.
There is not much more visibility into the kind of deal EFSF is targeting than there was last week, when the issuer sent its RFP to banks. The first banker said possible tenors ranged from three to 15 years and that a dual-tranche deal was unlikely, but the second banker said more than one tranche was on the table.
"You never really know with [EFSF]," the first banker said. "On the last [EFSF] trade, we suggested an option, several other banks did, and then we got mandated to do something totally different."
KfW has made its intentions clear, having mandated Deutsche Bank, Goldman Sachs, HSBC and JP Morgan to lead manage a new long five-year in the single currency.
Commenting on the possibility of the two major SSAs going head-to-head in euros, albeit perhaps in different tenors, the second banker said the market was in good shape for both trades. "The question today is the sequencing [of the deals]," he said. "But after a few weeks of very quiet markets ... the market is in the right mindset. Cash is there; yields are attractive."
BNG Bank, meanwhile, has tapped DZ Bank, Natixis, Nomura and TD Securities to place a new euro 10-year social bond.
The three mandated deals aside, Finland also typically issues in the late August window, according to IFR data. It has already indicated it is targeting a five-year deal in the third quarter.
The European Union's first deal of the post-summer period is not due until the week of September 11, its next scheduled window for a syndicated offering.
Across the pond
The Development Bank of Japan and the European Investment Bank are marketing deals to kick off issuance in dollars. It is an unusual pairing, given that DBJ is not one of the big hitters typically associated with executing so early in the post-summer window. But with DBJ's bond targeting the much-loved short end of the curve and cash piles building, the second banker said he was not worried about the Japanese agency's print.
DBJ tapped Barclays, Citigroup, Goldman Sachs and Mizuho to market the three-year sustainability bond at initial price thoughts of 67bp area over SOFR mid-swaps after the banks ran investor calls in the second half of last week. That starting level offered a mid-single-digit new issue concession, the second banker said.
Shortly after DBJ's announcement, EIB started marketing a five-year at IPTs of 35bp area via BMO, Citigroup and RBC.
"The other supras will all be following to see how it goes," the first banker said of EIB's deal. "There's a realistic likelihood of another one or two coming in the next couple of days. There's a Washington DC-based name looking. There's a non-European name looking. There's a Scandinavian name we're aware of looking. All in dollars."
Updated story: Adds BNG mandate, rewords parts to reflect that