LONDON, Oct 16 (IFR) - Short maturities are the order of the day in the US dollar market as IFC, Cades, HSH Portfoliomanagement and NWB line up deals for Tuesday’s business.
IFC is taking IoIs for a US$1bn no-grow 5yr Green Global via HSBC, JP Morgan and TD at mid-swaps plus 6bp area. Proceeds will be invested in renewable energy, energy efficiency and other climate friendly projects in the developing world.
“Five-years is a hot maturity - we saw that last week with EIB, so that should go well. It’ll be interesting to see what they start the level at,” said a banker away from the deal before talk was released.
Green bonds have been well-received by investors this year, last month KfW’s US$1bn 2% five-year Global for instance attracting books of over US$2.4bn and pricing 1bp-2bp inside fair value.
Cades is returning to the dollar market for the second time this year, marketing a two-year benchmark which will probably be its final issue of 2017.
BNP Paribas, JP Morgan and NatWest Markets are leads for the RegS/144A/3c7 transaction and have set IPTs at swaps plus 6bp area.
“They don’t have many maturities to do and the dollar curve is quite steep - there’s a couple of basis points between the 2s and 3s,” said a lead.
“We should see decent results. Two-years is an interesting point on the swap spread curve. It’s quite a wide number,” said a banker away from the deal.
Two-year swap spreads are at 25.75bp, according to Tradeweb data, while three-years are 22bp and five-years just 8bp.
Cades US$3.5bn 1.5% Jan 2019s are trading as tight as 6.25bp over mid-swaps, according to Thomson Reuters data, while US$2.25bn 1.875% Jan 2020s are at 6.5bp over.
HSH Portfoliomanagement has begun marketing its US$500m no-grow Oct 2019 Reg S deal at 26bp area over mid-swaps.
Citigroup, HSBC and JP Morgan are lead managers. The deal follows a debut trade last month - a US$500m FRN maturing in September 2020.
And Nederlandse Waterschapsbank has mandated Nomura and JP Morgan for a RegS/144A USD500m long 2yr FRN due February 2020 with IPTs at 3mL+3bp area.
More dollar issuance is expected this week, following a strong week in the currency last week led by EIB’s 2% US$3bn no-grow five-year. Orders for that reached US$7.8bn - the largest orderbook for an SSA dollar deal so far this year.
“All the deals are selling very well. The market has found a base in terms of outright yield and swap spreads are generally stable,” said a banker.
Another banker said issuers are flocking towards dollars as a result of “the expectation of limited moves in underlying fundamentals going forward” in the euro market due to the ECB’s asset purchasing programme. (Reporting by Melissa Song Loong; editing by Sudip Roy, Julian Baker)