(Updates with quotes, market comment)
By Matt Painvin
LONDON, April 11 (IFR) - The Republic of Austria is offering a generous premium to sell its first syndicated bond of the year, which is coming against a volatile backdrop for eurozone sovereigns ahead of the French elections.
The lead managers started marketing the 10-year benchmark on Tuesday morning at initial price thoughts of 17bp area through mid-swaps.
“The guidance is pretty generous,” said a banker away from the deal.
There was a 4bp new issue premium at that starting level, according to several market participants.
“They need to offer a large discount,” said a trader away from the deal. “We are at the top of the market, spreads are volatile and Austria has held in relatively well compared to the soft core (countries).”
European credit spreads have been under pressure since the beginning of the week, driven by French politics. Austria’s 0.75% October 2026 has widened 4.5bp against Germany over the last couple of days while French bonds have underperformed by 9bp.
Indications of interest at the first update had reached over €4.25bn, including €550m of demand from the joint lead managers. At the same time, books officially opened unchanged from IPTs at swaps less 17bp area.
“IoIs are impressive,” said the first banker. “The timing is interesting as it is the first week of reduced QE and they probably wanted to send a strong message.”
The bond, due 20 April 2027, is expected to price later today.
Bank of America Merrill Lynch (B&D), Goldman Sachs, HSBC, Nomura and UniCredit are lead managers and the remaining primary dealer group will be invited to participate as co-leads.
Austria is rated Aa1/AA+/AA+/AAA (all stable). (Reporting by Matt Painvin; editing by Helene Durand, Julian Baker)