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As we head into September, the somewhat barren summer months appear to be well and truly behind us, if market activity continues the way it began.
The post-summer rush kicked markets in to gear last Tuesday, bringing supply just shy of EUR 19bn over 3 days - the busiest week for corporates year-to-date. Natixis CIB was global coordinator for 3 corporates (including Engie and LVMH), covering 10 tranches and EUR 9.3bn, and was active bookrunner for a EUR 750mn green hybrid transaction for Telefonica.
Overall, reception across all transactions last week was good. With the current availability of liquidity and risk appetite, the market demonstrated an ability to absorb a high volume of activity across the spectrum, including jumbos, high beta / hybrids and duration.
In terms of demand, there was a clear skew towards longer tenors; not only is the long-end open, but it tends to outperform, especially for low beta - as evidenced by the transactions brough to market last week. Although it’s not unusual for one tranche to lag in large multi-tranchers it’s usually the belly that suffers - competing for the same investor base - but with flatter / less inverted rates curve over the summer, investors are happy to lock in yields on longer tenors.
Following the flurry of transactions, we might not see another week as busy as the one just passed, but September looks to remain a busy month. While issuers may not have significant needs, the market window is ripe for opportunity, at least ahead of the ECB (Sept 14) and Fed (Sept 19-20) meetings.
