September 27, 2017 / 1:59 PM / a year ago

KfW, EBRD turn US dollar market Green

LONDON, Sept 27 (IFR) - KfW and the EBRD have joined the rush of public sector issuers looking to fund in the US dollar market, taking full advantage of investor demand for assets in the currency after a break in benchmark supply last week.

Both issuers are marketing no-grow Green bonds, and follow BNG’s US$2.25bn three-year that priced on Tuesday and attracted over US$3bn of demand in BNG’s biggest book and biggest deal size in 2017 across all currencies.

The flurry of issuance is coming ahead of Golden Week in China, which is expected to slow down issuance in US dollars.

“The market is at a pretty rich point if you look at trades versus swaps,” said a banker. “We’re getting into single digits.”

Leads Bank of America Merrill Lynch, RBC and TD started marketing the US$1bn five-year trade at 12bp area over mid-swaps although this was revised to 10bp as books grew in excess of US$2.25bn.

The issuer’s US$4bn 2.125% bond due June 2022 and its US$3bn 2% bond due October 2022 were trading at similar levels.

It is the first time in 2017 that KfW has tapped the US dollar market in the Green bond format, with previous issuances done in sterling and euros.

The EBRD is following KfW with a US$500m no-grow July 2021 via Barclays, Credit Agricole and Citigroup. The leads are taking IPTs at 4bp area over mid-swaps.

Like KfW, it will be the EBRD’s first US dollar Green bond in 2017. Its 0.875% US$650m July 2019 deal, priced in July last year at 9bp over mid-swaps, was quoted at 2.4bp through, according to Tradeweb.


Away from the Green format, investors have the opportunity to buy into a rare deal from Finland’s Export Credit and SME Financing Agency, Finnvera, which is marketing a US$1bn via Credit Agricole, Citigroup, HSBC and Nordea.

At the last update, books were over US$1bn, falling short of the rampant demand seen on other US dollar trades this week.

“They probably don’t have as many people that know and buy them,” said a banker away from the deal.

Finnvera last came to the US dollar market with a US$500m June 2025 trade that priced in May 2015.

Since then, its main focus has been on euros to meet what are small funding needs. The issuer expects to raise €1bn-€2bn a year under its government-guaranteed debt programme.

“It’s a much less well-known name, but a pretty solid deal,” added another banker.

Leads started marketing the bonds at 7bp area over mid-swaps, a hefty premium over where its guarantor’s bonds were quoted in the same tenor. Finland’s recent US$1bn September 2020 bonds were quoted at 9.5bp through mid-swaps, according to Tradeweb.

“Recent names that have come to market are very solid. There was good distribution in terms of accounts and geographies,” said a banker.

SNCF Reseau is the other issuer that will be testing investors’ appetite for less well-known names. It has mandated Citigroup, Deutsche Bank, Nomura, RBC and Santander for a US dollar Reg S three-year bond.

The leads are taking indications of interest at 30bp area over mid-swaps. SNCF Reseau made its debut in the US dollar market a year ago, pricing a US$1bn three-year at 37bp over mid-swaps, on books over US$1.2bn. The bonds were bid at 22.5bp over on Wednesday, according to Tradeweb.

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