When issuing equity, companies need a story to get investors interested — usually a narrative that starts with a track record of growth and leads to more growth in future.
The closest thing to equity in the bond world is additional tier one capital, so it's not surprising the investors that buy it like a tale, too.
Funding markets are far from perfect amid the US's fast-changing trade wars.
Nevertheless, European equity indices are hovering close to all-time highs and bank valuations in particular are rising.
Now is the time for issuers to tell their stories in the AT1 market.
Commerzbank and Eurobank did so this week and were rewarded with huge orders.
Granted, there is robust investor interest for euro subordinated debt as rates are expected to be cut. But these deals had more to them.
Commerzbank is in the middle of a takeover bid from UniCredit. Even if the acquisition does not go through, the German lender has been scrutinising and reshaping its business to make it more appealing as a standalone entity.
It launched the AT1 with a juicy price concession, but managed to dump most of this by the time of pricing. Very few orders dropped as investors stayed spellbound by the developing saga of Commerzbank.
Eurobank's was an even more compelling rags-to-riches account. Its deal gave AT1 investors their first exposure to this Greek lender, based in one of Europe's fastest growing economies, where the stockmarket has quadrupled since 2016, including a 30% rise this year.
Southern European banks in general are popular now, in both the primary bond and secondary equity markets, thanks to that high growth. Many of them are paying pay high dividends.
But investors being willing to buy Eurobank’s debut AT1 at the same yield as Commerzbank's is more than just the European core and periphery converging.
It is about investors’ desire to be involved in the Greek economy, which grew 2.6% year-on-year in the fourth quarter, while Germany’s stalled.
If any other bank has a story to tell — and wants to refinance an existing AT1 or even bolster its capital with a new one — the current market is ready to listen.