NatWest Markets Strategy & Sales

NatWest: Syndicate Speed Read
Joanna Currie
24 March 2022 08:25

Joanna Currie
+33 173 249 867


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NatWest: Syndicate Speed Read


  • A stable open in Europe this morning following a fairly weak session in Asia. Credit indices are opening a touch wider, sovereign yields are continuing their path higher while equity futures are in the green
  • The US and the EU are close to reaching an agreement to reduce the bloc’s dependence on Russian energy supply. The deal could be sealed as early as tomorrow, and would ensure supplies of US natural gas and hydrogen
  • The OBR lowered its UK Government borrowing projections – only moderately more than expected in the near-term, but with larger reductions in the second half of the 5-year forecast. For 2022-23 FY, the OBR forecasts a CGNCR deficit of £94.3bn, a little below NWM forecast at £100bn. However, there is a larger-than-expected undershoot in gilt issuance in 2022-23 FY resulting from a larger-than-expected over-fund in 2021-22 FY.
  • According to our strategy desk, this is near-term supportive for gilts, given the lower-than-expected issuance number. Longer-term, however, this still represents a sizeable increase in duration for the market to absorb net of APF buying vs 2021
  • In focus today we have Eurozone and UK flash PMIs, which will provide a gauge of the impact of the Ukraine war on the economy


EMEA European Open: MAIN +0.00bp, XOVER -0.50bp, FINSEN +0.50bp, FINSUB +0.50bp


Supply was subdued yesterday but overall well received and further demonstrating risk appetite from investors. Hamburger Sparkasse printed a €500m covered on the back of a book which topped €1.75bn and landed at €1.5bn, allowing the issuer to move 4bps from print flat to FV. The highlight of yesterday was the reopening of the AT1 market, following solid reception to Deutsche Bank’s T2 last week and corporate hybrids earlier this week. Intesa printed the first benchmark AT1 of the year in the euro market and received solid demand for their trade despite some noise around the name’s Russian exposure as well as recent volatility in BPTs. From IPTs of 6.625% area, books built to >€3bn and the issuer was able to move 25bps to land with a concession in the context of 40bps, with around €0.5bn of book drops. Overall, this demonstrates the strength of current risk appetite and, while reasonable concessions continue to be required, validates increasing confidence in the market. Corporates meanwhile had another busy day yesterday – we were out with a dual tranche for EON, printing short 3yrs and 9yrs with significant demand across both while Carrefour achieved similarly strong demand and Northern Powergrid demonstrated demand for duration in the GBP market. Wrapping up yesterday’s supply was a dual tranche fixed and float 4NC3 from Standard Chartered which printed with solid books and a NIP in the context of 10bps while Hana Bank’s 5yr was similarly well received.


Looking ahead, with solid momentum on recent transactions we expect supply to continue at a steady pace. Nordea are out with a 7yr covered, testing a slightly longer maturity than has been in focus currently, while Arkea Public Sector are out with a 6yr.


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