The Outlook for Bank Finance in 2010

The financial institutions sector was the hardest hit of all the major bond markets in 2009 following the collapse of Lehman Brothers and the ensuing financial crisis. For the first few months of 2009 only the best or bravest came to market without government guarantees. Rabobank was one such institution, launching a Eu5bn deal in the first weeks of the year that garnered an impressive book size of nearly Eu7bn. It paid for its success though, paying 150bp over for the five year deal. However, the Dutch co-operative proved that the markets were still functioning and, perhaps more importantly, that it had access to liquidity even in those darkest of days. Thankfully for all concerned in the financial institutions sector, as the year progressed, conditions eased and deals began to flow. Piece by piece, the FIG jigsaw began to take shape, with hybrid capital and regulation-driven deals to the fore in the second half of the year. By the end of 2009, issuers, investors and bankers were feeling increasingly confident that the coming year would be easier to navigate and operate in. In this inaugural roundtable on bank finance, sponsored by Rabobank, some of the leading FIG market participants discuss how the market is continuing to recover, which products and geographies will fare better than others, the impact of contingent capital bonds and whether or not that product will taken up by other issuers across continental Europe and beyond, and how the market will cope with the vast amounts of short term debt due to be refinanced this year as well as the large amount of additional capital financial institutions will need to meet regulatory requirements.