16 Jan 2015
SSA issuance to shift towards USD – TDS
FXStreet (Barcelona) - The TD Securities Team believes that the previous 35% USD issuance in the SSA sector will grow this year with expected Eurozone volatility in 2015 anticipated to aid this increase.
Key Quotes
“Issuers had previously been able to take advantage of the widening in the EUR/USD cross-currency basis swaps to issue debt in EUR and swap the proceeds back to USD. Improving conditions in Europe helped narrow the spread from the widest levels seen in 2012, however, reducing the attractiveness of this arbitrage.”
“Given our expectations that Eurozone volatility in 2015 will not match levels seen during the 2011-2012 period, the tighter spreads should continue to undercut the advantage to issuing in EUR, increasing the relative size of USD funding programs. USD issuance comprised 34% of gross SSA sector issuance in 2014, and we expect this percentage to grow this year.”
Key Quotes
“Issuers had previously been able to take advantage of the widening in the EUR/USD cross-currency basis swaps to issue debt in EUR and swap the proceeds back to USD. Improving conditions in Europe helped narrow the spread from the widest levels seen in 2012, however, reducing the attractiveness of this arbitrage.”
“Given our expectations that Eurozone volatility in 2015 will not match levels seen during the 2011-2012 period, the tighter spreads should continue to undercut the advantage to issuing in EUR, increasing the relative size of USD funding programs. USD issuance comprised 34% of gross SSA sector issuance in 2014, and we expect this percentage to grow this year.”