After reporting earnings that were broadly in line with projections, Wells Fargo took to the sterling FIG market in what was the first deal in the currency from a financial institution since the June 23 plebiscite. On Tuesday, the bank printed a whopping £1bn deal on some £3.25bn in demand. As of Wednesday, none of its peers had followed into the sterling market, but the deal is proof that the investor pool is there — and starved for paper.
On Wednesday, Goldman Sachs and Bank of America took to the euro denominated market with dual tranchers. Goldman is out with a five year floater and 10 year fixed rate offering, while BAML is coming with a three year floater and seven year fixed.
Meanwhile, NRW Bank is taking to the Reg S dollar market with a $1bn senior deal.
A ruling from the European Court of Justice on Tuesday will have disappointed Italian officials hoping for some leverage in their talks to get the nation’s banks into working order again. The ECJ ruled that the Banking Communication of 2013, which requires equity holders and subordinated creditors to be bailed in before public money can be used to recapitalise a failing bank, is constitutional. However, it also said the rule isn’t binding on member states, who can flout the rules, though not with total impunity.
On Wednesday, Morgan Stanley reports earnings.
‘Anaemic’ ABS pipeline spurts flurry of new deals
Clydesdale Bank announced a new prime UK RMBS deal from its Lanark shelf on Monday. The deal is being arranged by Citi, with Bank of America, Deutsche Bank, Morgan Stanley and Citi acting as joint lead managers.
Portuguese energy company Energias de Portugal also announced a new deal on Monday, Volta IV, an electricity tariff deficit deal backed by payments from electricity grid operators to cover the difference between EDP’s power generation costs and the electricity tariff levels set by the national energy regulator.
The two deals join GE Money Bank in France’s SapphireOne 2016-1 French RMBS deal, which was announced two weeks ago.
The end of July usually sees a burst of primary issuance in the ABS market, as issuers look to tap the market before desks clear in August. But one investor complained on Tuesday that the pipeline still looked “anaemic” compared to previous years.
One more deal could yet surface in the market before the summer break, if Cerberus goes ahead with a Towd Point Mortgage Funding-Auburn 10 transaction, which would be backed by loans from its CHL UK buy-to-let shelf.
Covered bond primary picks up as yields turn negative
With an oversubscription ratio of more than five times,Deutsche Hypo’s €250m 6.5 year tap, issued on Friday, put to rest doubts about execution of negative yielding covered bonds that until this week had probably hindered supply.
Canadian Imperial Bank of Commerce followed on Monday with the first negative yielding non-Eurozone covered bond which also attracted a comfortably oversubscribed order book and was priced with a tiny new issue concession.
WL Bankreturned on Tuesday to issue a €250m tap of its 10 year, a duration that was long enough to ensure a positive yield. On Wednesday HSH Nordbank followed with another €250m tap of a 6.5 year deal which was also expected to deliver a positive return. At the same time Commonwealth Bank of Australia opened books for a 10 year benchmark.
Top FIG stories this week:
CIBC set to issue first zero coupon Canadian covered
Deutsche Hypo blows open the door to negative yields
EC state-aid criteria not illegal, just not binding either, says ECJ
Sterling comes alive with Wells, TSB deals
Citi's Corbat quizzed on political turmoil, takes Venezuela writedown
UKAR dropped conflict rules for Credit Suisse on Granite
New Cerberus UK RMBS deal could surface soon
StormHarbour arranging Portuguese electricity tariff ABS for EDP
Clydesdale readies UK RMBS return