KfW planning green bonds; funds see $371 million of inflows; spreads tighten

By Aleesia Forni

Virginia Beach, Sept. 19 – The investment-grade bond market closed another solid week on Friday with no new deals pricing.

The session did see KfW announce plans to bring to market an offering of fixed-rate green bonds, according to a FWP filed with the Securities and Exchange Commission.

Even with the two-day Federal Reserve policy meeting, which kept a lid on issuance mid-week, the market saw roughly $19.35 billion of investment-grade paper price.

“It was a non-event,” a source said of the Federal Open Market committee’s statement.

However, the week’s total fell just shy of what sources had expected to be $20 billion to $25 billion of supply.

In other news, corporate investment-grade funds saw inflows of $371 million for the week ended Sept. 17, down from last week’s $934 million of inflows.

The year-to-date total is roughly $53 billion of inflows.

Looking ahead, another busy primary market is expected for next week, with around $20 billion to $25 billion of supply forecasted.

“With the FOMC out of the way, next week should be wide open [for new issuance],” a source said.

The Markit CDX North American Investment Grade series 22 index firmed 1 basis point to a spread of 56 bps on Friday, 6 bps tighter compared to Monday’s close.

American Express Credit Corp.’s recently priced $700 million of 1.55% three-year notes traded 1 bp tighter on Friday, a source said.

KfW eyeing green bonds

KfW (Aaa/AAA/AAA) plans to offer fixed-rate green bonds, according to a FWP filed with the Securities and Exchange Commission.

The deal’s size is yet to be determined, subject to market conditions.

The notes will be guaranteed by the Federal Republic of Germany.

Proceeds will be used in KfW’s general business.

The German government-owned development bank is based in Frankfurt.

AmEx Credit firms

The recently priced $700 million issue of 1.55% three-year notes priced by American Express Credit continued to trade better on Friday.

The notes were quoted at 47 bps bid on Friday, 1 bp better compared to mid-morning.

The issue sold on Thursday with a spread of Treasuries plus 50 bps.

AmEx Credit’s $1 billion offering also included $300 million of three-year floaters priced at par to yield Libor plus 30 basis points.

Barclays, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. were the bookrunners.

American Express is a New York-based financial services company.

Bank/brokerage CDS costs decline

Investment-grade bank and brokerage CDS prices declined on Friday, according to a market source.

Bank of America Corp.’s CDS costs declined 1 bp to 62 bps bid, 65 bps offered. Citigroup Inc.’s CDS costs were 1 bp lower at 60 bps bid, 63 bps offered. JPMorgan Chase & Co.’s CDS costs fell 1 bp to 50 bps bid, 53 bps offered. Wells Fargo & Co.’s CDS costs ended 1 bp higher 39 bps bid, 44 bps offered.

Merrill Lynch’s CDS costs were 1 bp lower at 64 bps bid, 68 bps offered. Morgan Stanley’s CDS costs ended flat at 71 bps bid, 74 bps offered. Goldman Sachs Group, Inc.’s CDS costs declined 2 bps to 74 bps bid, 77 bps offered.

Paul Deckelman contributed to this review

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