There were more record order books in the US dollar SSA market on Thursday, according to IFR data, as four issuers made good use of the excellent conditions which have persisted in the opening weeks of 2024.
Demand failed to be dented even in the face of renewed questions around the likely path of central bank rate cuts, after new data created uncertainty about both the Federal Reserve and the European Central Bank's likely actions this year.
"Another day, another set of records," said a lead on the European Bank for Reconstruction and Development five-year dollar deal out on Thursday. Record demand showed up for the EBRD and BNG Bank's bonds despite those deals coming tighter versus previous primary supply, the lead noted.
Commenting on why demand remained so supportive, the EBRD lead said: "It seems any small pickup over US Treasuries is very well received. [And bank treasury accounts] do get very nice asset swap [spreads]."
Thursday's result is not a promise of cloudless skies for the foreseeable future, however.
"If the market thinks it's got its expectations wrong by a significant amount – not just a 25bp cut here and there – then having so much supply [will lead buyers to] step back. They've bought a lot in the space of two weeks," the EBRD lead said.
But that has not been the case so far.
The EBRD gathered a US$7.9bn book by the time it announced final terms of US$2.5bn at a spread of 39bp above mid-swaps – 3bp in from IPTs – for its five-year appearance. At final terms the book was already US$2.9bn clear of the EBRD's previous largest book in US dollars, a US$2bn five-year Global in March 2023 with books getting US$5bn of demand.
This achievement is despite the EBRD coming at the tightest level to SOFR mid-swaps that the 2024 US dollar SSA market has seen for a five-year.
Barclays, Deutsche Bank, Morgan Stanley and Scotiabank ran the EBRD deal.
The second record book of Thursday came from BNG.
Investor interest took the book for the Dutch name's five-year to US$7bn by the first update, which included US$700m from the joint lead managers. The non-JLM interest was more than enough to beat BNG's previous dollar book record of US$4.7bn, however.
BNG's syndicate, comprising Barclays, Daiwa, RBC and Santander tightened the bond 3bp to land it at 49bp above SOFR mid-swaps.
"That 49bp over SOFR [mid-swaps], if you think the European Investment Bank was issuing just [at five years two weeks ago] at 44bp, it's a pretty incredible price for BNG," the EBRD lead said.
There is some selectivity when it comes to tenors in US dollars, said the EBRD lead, who added that with investors having long-term views on the market and the direction of rates, they are wanting to express that in longer products like five-year bonds.
That did not stop record demand also finding its way to German regional agency L-Bank, however, which got a US$3.2bn non-JLM bid for its US$2bn two-year – US$300m more than the demand high the name had previously reached via a three-year last March.
L-Bank's leads set the spread at SOFR mid-swaps plus 32bp from the start. BMO, Deutsche Bank, RBC and TD Securities ran the trade.
The same day, African Development Bank won US$3.5bn of interest for its US$2bn February 2027 social bond. It set the spread at 31bp over SOFR mid-swaps having tightened it 2bp versus guidance.
BNP Paribas, Bank of America, Credit Agricole, JP Morgan and Nomura ran the deal.