EU Bond Demand at $155 Billion, Topping Sale Amount by Eightfold

(Bloomberg) -- The European Union notched up more than 130 billion euros ($155 billion) of orders for its second sale under its NextGenerationEU program, expanding efforts to build a curve of securities dedicated to funding its recovery from the coronavirus pandemic.

The EU is selling nine billion euros of five-year debt and six billion euros of 30-year debt Tuesday, meaning that orders topped the amount offered more than eightfold, even though demand fell short of its first sale earlier this month.

The offering is part of program aiming to raise $1 trillion of debt over five years to finance grants and loans to member states. More issuance is slated by the end of July, while green bonds may come later in the year.

“The focus on creating a liquid curve should attract a wide set of investors,” said Peter McCallum, rates strategist at Mizuho. McCallum expects to see “substantial demand even with a more conventional new issue premium,” he added.

The EU debuted a 20-billion-euro sale 10-year securities earlier this month, where order books hit 142 billion euros, just short of the 145 billion euros for a similar-dated social bond last year. The 10-year offering was notable for the exclusion of 10 banks, eight of which have since been cleared to participate.

The five-year issue was given final terms of 11 basis points below midswaps, while the 30-year was 22 basis points above.

Four of the cleared banks -- Credit Agricole CIB, Deutsche Bank AG, JPMorgan Chase & Co. and UniCredit SpA -- have been appointed joint lead managers along with Goldman Sachs Group Inc. for Tuesday’s sale.

A Rival to Treasuries? EU Bond Binge Raises Prospect: QuickTake

Europe

There are at least five deals expected to price today, including the NextGenerationEU one.

Asia

Asian companies lead a charge of dollar bond deals on Tuesday after the two sovereigns -- the Philippines and Mongolia -- from the region headlined more than $6 billion of offerings in the U.S. currency on Monday.

• There were at least eight issuers seeking to price notes in dollars including China National Bluestar Group Co. and Korea’s Mirae Asset Securities
• Renault SA priced 150 billion yen ($1.36 billion) of debt, marking its first issuance in the Samurai debt market since 2018
• In Indonesia, investors are rushing into dollar notes of companies that may be least affected by soaring coronavirus infections, such as electricity and staple food firms, and that’s helping keep yield premiums down despite the grim virus outlook
• Click here for the Asia Bondwrap

U.S.

Three borrowers including South Korea’s LG Chem combined to price $2.7 billion of investment-grade bonds on Monday, kicking off what’s expected to be a relatively subdued week of issuance.

• Dealers estimate about $15 billion will price this week ahead of the July 4 holiday
• In the U.S. high-yield bond market, just one company sold bonds. MidCap Financial Issuer Trust had no trouble tightening its deal while paying zero in terms of new issue concessions, as it had the primary market all to itself

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