Daily Musings and Music of a Euromarket Professional

Uncomfortable as it may be, being aware of sitting on a time bomb shouldn't keep us from being able to laugh about it - and to listen to some music!

Daily musings of a euromarket professional


Saturday, 25 February 2012

03 January 2012


03 January 2012

Credit quite more aggressive at the open, while equities, which had probably gone ahead of themselves in yesterday’s lurch, treaded water for most of the morning, until lifted by US figures. Financials again rallying, although the tone of the last Greek PSI discussions (Remember that? That was one of the triggers for the crisis, although no one really speaks about this anymore these days…) doesn’t really sound as positive. Markets hence still mildly risk on. EUR over the 1.30 mark again, too.
Hefty T-Bill auction day with EUR 8.7bn in France, EUR 4.65bn in Holland and EUR 2.4bn in Belgium at r18 months lows of 0.264% and 0.364% in 3 and 6 months (versus 0.78% and 2.44 in Dec and Nov respectively!)
On the sovereign side, some adjustments of last days’ spread movements with Austria and Spain wider (to match late French and Italian movements) and others a touch weaker with Bunds, too, on the weakish side at open, but holding despite the afternoon rally. Spain, of course, surprising negatively with its deficit revision from 6 to 8%.
Spreads to German 10 YRS: Netherlands +38, Finland +48, Austria +123 (+9), France +139 (+6), Belgium +238 (+6), Spain+339 (+19) and Italy +500 (-2). SovX wider against the trend.

Tapping into the famed January long end liquidity: The rapidly growing covered bond pipeline with a dozen deals announced or ear-marked has started to yield supply and we had 3 benchmark priced today for EUR 5.25bn, making this the biggest CB day since 11 October last year. 3 further deals are already on track for pricing tomorrow. The tone in pricing, as often, has probably been set by CRH, which gave up 20bp in New Issue Premium, thus probably spoiling the party for some of its French peers, who might need to follow suit. ING and UBS giving up 10-15 bp, as well, knowing that where bids really are is probably a rather rhetoric question after all this time of virtually non-trading.
Deal sizes were clearly preferred to price and we had a WYSIWYG day (for those who remember that serious improvement in desktop publishing in the 90s…): What You Subscribed Is What You Get, which might limit rapid secondary tightening and set these latest levels into stone for the other issuers.
On the Agencies / Sovereign side, the ESFS is in the market for a EUR 3bn 3 YRS deal. Agencies and EM sovereign names should fill the space soon. No corporate deal. Where have they all gone??? Rabo is reopening the senior financials market, although at Aaa/AA/AA and with CDS trading half of the index it is not exactly a very representative candidate of the situation out there…

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