Euro interest rate swaps saw strong activity due to increased bond issuance. Ten-year spreads ended the week about 1.5bp tighter on a par asset-swap basis over Euribor at 21.4bp.
A trader at Morgan Stanley, based in London, who asked to remain unnamed, said swaps activity was a result of more issuers entering the market to take advantage of the steep yield curve. “All of the [bond] deals this week were swapped - at least 99%.”
The biggest issue was a €6 billion, 11-year bond by the Finnish government, the majority of which was swapped, dealers claimed.